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U.S. state and federal regulators settled with crypto platform Nexo Capital Inc. over its sale of an unregistered crypto lending product.

The U.S. Securities and Exchange Commission and various state regulators entered settlements in parallel actions that will see the firm pay US$45 million — US$22.5 million to the SEC and US$22.5 million to U.S. state regulators — to settle allegations that the company failed to resister its retail crypto asset lending product, the Earn Interest Product (EIP).

According to the SEC’s order, the product — which offered interest to investors on their crypto assets, and enabled the firm to use investors’ assets to generate income — amounted to a security, which was required to be registered.

“We charged Nexo with failing to register its retail crypto lending product before offering it to the public, bypassing essential disclosure requirements designed to protect investors,”  SEC chair Gary Gensler said in a statement.

“Compliance with our time-tested public policies isn’t a choice. Where crypto companies do not comply, we will continue to follow the facts and the law to hold them accountable,” he added.

“We are not concerned with the labels put on offerings, but on their economic realities. And part of that reality is that crypto assets are not exempt from the federal securities laws,” said Gurbir Grewal, director of the SEC’s enforcement division.

“If you’re offering or selling products that constitute securities under well-established laws and legal precedent, then no matter what you call those products, you’re subject to those laws and we expect compliance,” he said.

According to the umbrella group of state regulators, the North American Securities Administrators Association (NASAA), the company also failed to comply with state registration requirements in selling the product to U.S. investors.

“Our securities laws are designed to protect investors through full and fair disclosure. The registration process is essential to investor protection and states are committed to taking action when companies ignore their obligations,” said Andrew Hartnett, NASAA’s president and Iowa’s deputy insurance commissioner.

The firm agreed to settle the allegations, without admitting or denying the regulators’ findings.

The SEC noted that it considered the company’s cooperation with regulators, and its prompt remedial actions, in settling the case.

In a statement, the company said that the resolution “closes all multi-year-long inquiries into Nexo, looking at various aspects of the business, following the company’s voluntary decision to stop offering its EIP in the U.S., Nexo’s proactive exit from the U.S. market in an orderly fashion, and an agreement to pay a monetary penalty.”

Nexo co-founder Antoni Trenchev said the firm is “content with this unified resolution which unequivocally puts an end to all speculations around Nexo’s relations to the United States.”

Co-founder Kosta Kantchev added the firm is “confident that a clearer regulatory landscape will emerge soon, and companies like Nexo will be able to offer value-creating products in the United States in a compliant manner[.”