Nexo Capital agreed to pay a total of $45 million in penalties to settle state and federal charges it failed to register its crypto asset lending product as a security.

The settlements, announced Thursday by the Securities and Exchange Commission (SEC) and North American Securities Administrators Association (NASAA), each included fines of $22.5 million. Nexo also agreed to cease the offering and sale of its lending product.

Nexo, founded in 2018 and incorporated in the Cayman Islands, specializes in lending products linked to cryptocurrency. According to the SEC’s order, Nexo marketed its Earn Interest Product (EIP) to U.S. investors starting in or around June 2020 with the promise it would earn interest for investors who loaned their cryptocurrency to Nexo.

The product is a security and thus should have been registered with the SEC, the agency found.

Nexo took notice when, in February 2022, BlockFi agreed to pay $100 million in settlements with the SEC and a coalition of states for not registering its cryptocurrency lending product as a security, according to the agency. Days after the first-of-its-kind case was announced, Nexo voluntarily stopped offering the EIP to new U.S. investors and ceased paying interest on new funds added to existing EIP accounts belonging to U.S. investors, the SEC said.

In December, Nexo announced it planned to stop offering the EIP in certain states immediately and would phase out all its services and products across the country.

“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,” said Gurbir Grewal, director of the SEC’s Division of Enforcement, in an agency press release.

The SEC credited Nexo for voluntarily halting the marketing of the EIP.

Seventeen state securities regulators have agreed to the terms of NASAA’s settlement with Nexo, the organization announced. Nexo also settled with the attorney general of New York, the Texas Department of Banking, the Washington Consumers Services Division, and the Alaska Division of Banking and Securities, the company said in a statement on its website.

U.S. regulators “do not contend that Nexo engaged in any fraud or misleading business practices or that any Nexo customers have been harmed or misled about Nexo’s financial health,” according to the company.

The coordinated resolution “unequivocally puts an end to all speculations around Nexo’s relations to the United States,” Antoni Trenchev, Nexo co-founder, said.