SEC Files Settled $45 Million Case Against NEXO for Unregistered Crypto Offering

Nexo Agrees to Pay $45 Million in Penalties and Cease Unregistered Offering of Crypto Asset Lending Product

The Securities and Exchange Commission today charged Nexo Capital Inc. with failing to register the offer and sale of its retail crypto asset lending product, the Earn Interest Product (EIP). To settle the SEC’s charges, Nexo agreed to pay a $22.5 million penalty and cease its unregistered offer and sale of the EIP to U.S. investors. In parallel actions announced today, Nexo agreed to pay an additional $22.5 million in fines to settle similar charges by state regulatory authorities.

According to the SEC’s order, in or around June 2020, Nexo began to offer and sell the EIP in the United States. The EIP allowed U.S. investors to tender their crypto assets to Nexo in exchange for Nexo’s promise to pay interest. The order states that Nexo marketed the EIP as a means for investors to earn interest on their crypto assets, and Nexo exercised its discretion to use investors’ crypto assets in various ways to generate income for its own business and to fund interest payments to EIP investors. The order finds that the EIP is a security and that the offer and sale of the EIP did not qualify for an exemption from SEC registration. Therefore, Nexo was required to register its offer and sale of the EIP, which it failed to do.

Elon Musk Sold Tesla Shares Before Company Acknowledged Weakness

Late last year, after a wave of news reports pointing to sagging demand for his company’s vehicles, Tesla Inc. Chief Executive Elon Musk sold almost $3.6 billion of his shares in the electric-car maker.

On Jan. 2, Tesla announced fourth-quarter vehicle deliveries that were significantly below the company’s most recent forecast to investors. The news sent Tesla’s stock price plunging when markets opened the next day.

The timing of the stock sales raises a crucial question: Did Mr. Musk know that business had slowed when he sold his shares? Tesla hadn’t updated investors on its outlook in nearly two months.

“This should be of great interest to the SEC,” says James Cox, a securities-law professor at Duke University who has testified before Congress about insider trading. “The issue here is, what did he know and what was the market anticipating when he sold? That’s a critical moment.”

SEC Awards Approximately $18 Million to Three Whistleblowers

The Securities and Exchange Commission today announced three awards totaling approximately $18 million to three whistleblowers whose information and assistance led to a successful enforcement action.

The first whistleblower provided the SEC with detailed and significant information that led to the opening of an investigation into a fraudulent scheme. This whistleblower’s information and assistance saved considerable staff time and resources, and had a significant impact on the overall success of the enforcement action. The second and third whistleblowers’ information, which was provided later in the investigation, significantly contributed to the success of the enforcement action as well.

NCLA Challenges Modern Star Chamber Proceedings at Public Company Accounting Oversight BoardThe New Civil Liberties Alliance filed a complaint today in the U.S. District Court for the Northern District of Texas seeking declaratory and injunctive relief from the Public Company Accounting Oversight Board’s secret, unaccountable, and inherently biased prosecutorial processes. With no meaningful supervision by any government official appointed or directly removable by the President, and using funds raised by private taxes with no Congressional appropriation or oversight, PCAOB has investigated and brought a secret prosecution seeking to strip NCLA’s client of his livelihood and impose quasi-criminal monetary penalties—without a jury trial, due process of law, an impartial adjudicator, or any constitutional accountability.

Holmes Should Be in Prison, Not $13,000-a-Month Estate as She Appeals, US Says

Theranos Inc. founder Elizabeth Holmes should report to prison as scheduled in April, prosecutors say, rather than living on an expensive estate while she appeals her conviction.

As Holmes fought fraud charges she lived on an estate with reportedly $13,000 in upkeep costs each month, conceived two children and “continues to show no remorse,” government lawyers said.

Now she has sought to loosen restrictions on her travel, citing “vague references” to her partner Billy Evans’s work, prosecutors said.

Elon Musk Jury Should Be Warned Ahead of His Testimony, Opponents Say

“You must also reject and disregard any fact, testimony, or argument that he acted innocently, in good faith, or anything less than recklessly,” the plaintiffs lawyers suggested Chen tell jurors, referring to Musk.

In opening arguments Wednesday, Musk’s lawyer said, “His mind was pure. His intentions were sincere. He was operating in good faith” — and “there was no fraud.”

Lawyers for both sides have argued for months over the instructions, and how forcefully they should be conveyed to jurors. They’re important because the claims that Musk’s tweets were false and reckless would ordinarily be decided by jurors — and having the issue already decided by the judge puts investors much closer to holding the CEO liable for potentially billions of dollars.

SPAC Deals Shrink After Speculation Wanes

Some of Wall Street’s most speculative investors are scaling back their ambitions, doing deals that are a 10th the size of their flashy, top-of-market acquisitions.

Creators of special-purpose acquisition companies, or SPACs, are valuing companies they seek to take public at the lowest levels since the boom began nearly three years ago, figures from Dealogic show. The average announced SPAC merger value has fallen to about $200 million so far in January, down from more than $2 billion for much of 2021 during the sector’s peak.