Former sec chief lashes out on nexo’s $45 mn deal with sec

Adoption & Regulations

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In response to charges that the digital asset company, Nexo Capital Inc., had violated securities regulations by marketing a cryptocurrency lending product, the firm has agreed to pay a penalty of $45 million to U.S. SEC. However, a former SEC official has raised doubts about Nexo's so-called "victory" in the event that the financial watchdog relentlessly pursues the country's major crypto companies.

Nexo’s Claim For Victory

On Thursday, the Committee on Securities and Foreign Affairs. announced that it had determined that Nexo's offer of Earn Interest was a security that should have been registered with the agency. While speaking on Nexo’s supposed self-proclaimed victory, John Reed Stark, the former chief at the SEC Office of Internet Enforcement stated that — Nexo just like every other defendant and respondent before, during, and after an investigation by the SEC, reached a settlement without “admitting or denying wrongdoing.”

Nexo contributes $45 million to the SEC, but claims a win over "innovation."

According to Stark, this latest cryptocurrency trend was started by BlockFi, who, after paying a $100M fine to the SEC, instantaneously bragged that BlockFi’s appeasement was an exceptional & phenomenal win for “regulatory clarity.” BlockFi absurd post-SEC trading spin is now being followed by other cryptocurrency firms as well.

Nexo pays a huge $45m per second, but claims a win for "innovation." This ridiculous spin is the latest crypto trend. Blockfi also boasted its $100m dry penalty as a win for the "clarity of regulation." other than that Ms. Lincoln, how did the room look? https://t.co/Hp3fZXvJpB pic.twitter.com/MztaikKMB9
— John Reed Stark (@JohnReedStark) January 20, 2023

SEC’s Tussle With Crypto Firms

In a similar vein, the SEC registration threatened to level charges against when the U.S.-based crypto exchange began marketing a similar crypto-lend program and when confronted by the SEC about the potential securities violation, called the financial watchdog “sketchy” in a blog post. Coinbase, not surprisingly, finally surrendered and decided not to start the program.

Stark was quoted as saying:

Coinbase dodged the ball when it terminated its Lend program, abandoning its battle with the U.S. Securities and Exchange Commission.

While speaking on Gemini’s tussle with the SEC, Stark noted that Gemini’s principal defense against the SEC accusation is that the SEC is being “very lame,” which does not bode well given what happened to Coinbase, BlockFi, and Nexo. In conclusion, the former SEC official states that the statements made by these companies–which comprise of claiming victory for winning “regulatory clarity”–have become spontaneous and sporadic while drawing comparisons to politicians who are far more conservative in their spin.

Also Read: New FTX CEO John J. Ray III Is Planning To Restart The Failed Crypto Exchange