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Nexo Group and its co-founder Antoni Trenchev violated the law “with the offer and sale of Nexo’s Earn Interest Product (EIP) accounts," Attorney General Brian Frosh and Attorneys General from seven other states said.
More than 93,300 US residents have EIP accounts with Nexo Group, investigators noted, of which, more than 1,800 were from Maryland. Those accounts collectively hold assets totaling approximately $800 million nationally and $15 million in Maryland alone, according to Frosh.
The crypto-lending platform Nexo Group is accused of running an unregistered, interest-bearing cryptocurrency product while operating as an unregistered broker-dealer, authorities allege.
According to Frosh’s office, Nexo’s EIP accounts enabled customers to deposit crypto access with them, and in exchange, customers purportedly earned interest on their deposits.
Prosecutors said that Nexo offered investors interest rates of up to 36 percent on their deposited assets, which is “significantly higher than rates offered for short-term investment grade, fixed-income securities or bank account savings."
Nexo allegedly offered and sold unregistered securities in the form of its EIP accounts. Further, Nexo “misrepresented and omitted material facts, such as its regulatory compliance and information related to interest generation," the AGs maintain.
Regulators California, Kentucky, New York, Oklahoma, South Carolina, Washington and Vermont also have cease-and-desist orders against Nexo.
Frosh said that his office and the state have been actively involved in the investigation into Nexo.
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