The Wisconsin Department of Financial Institutions (DFI) has entered into a consent order with Nexo Inc. and Nexo Capital Inc. (Nexo) to resolve the DFI’s Nov. 3, 2022, securities enforcement action in connection with Nexo’s Earn Interest Product program, according to a news release.
Nexo, formed in 2018 in the Cayman Islands, provides crypto-asset-related financial services, including investing, trading, borrowing, and lending, to retail and institutional customers in the United States. The Earn Interest Product program offered investors interest-bearing crypto asset accounts commonly referred to as “crypto interest accounts.”
An investigation concluded that Earn Interest Product accounts are securities and require investor protections, such as registration and risk disclosures, before they can be offered and sold to investors.
DFI helped negotiate a $22.5 million multistate settlement with Nexo on behalf of 53 U.S. jurisdictions. Under that settlement, Nexo has agreed to implement various investor protection procedures for the benefit of Nexo’s U.S. investors. The U.S. Securities and Exchange Commission entered into a separate settlement with Nexo for the same penalty amount.
The DFI recommends Wisconsin investors withdraw all assets from their Nexo accounts as soon as possible because Nexo has announced it is phasing out its products and services in the United States over the coming months.
