Bulletin # 3082 - Week Ending March 17, 2023

This bulletin constitutes the only official notification you will receive from this office concerning any of the following applications.  Any observations you may have are solicited.  Any comments should be in writing to Jorge L. Perez, Banking Commissioner, Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800.  Written comments will be considered only if they are received within ten business days from the date of this bulletin.

BANK ACTIVITY

Section 36a-145 of the Connecticut General Statutes requires that certain applications for a branch or limited branch at which loans will be made address how the establishment of the branch will be consistent with safe and sound banking practices and promote the public convenience and advantage. Plans may be submitted when such applications are filed and any plans that are filed will be made available for public inspection and comment at the Department for a period of 30 days. Questions concerning branch activity should be directed to the Financial Institutions Division at (860) 240-8180.

DATE: March 15, 2023
BANK: Liberty Bank, Middletown 
LOCATION: 94 Shaker Road, East Longmeadow, MA 01028
ACTIVITY-BRANCH TYPE: Filed Notice of Loan Production Office Closing 
PROPOSED CLOSING DATE: June 2023

DATE: March 15, 2023 
BANK: Liberty Bank, Middletown
LOCATION: One Monarch Place, 22nd Floor, Springfield, MA 01144-1099
ACTIVITY-BRANCH TYPE: Filed to Establish Loan Production Office 
PROPOSED OPENING DATE: June 2023

SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY

Nexo Capital Inc.

On March 17, 2023, the Banking Commissioner entered a Consent Order (No. CO-23-20236-S) with respect to Nexo Capital Inc., a financial services company located in Grand Cayman, Cayman Islands. Nexo Capital Inc. is not registered or licensed in any capacity with the Commissioner. The Consent Order was an outgrowth of a multistate investigation into the entity’s sale of interest bearing digital asset accounts called Earn Interest Product ("EIP") accounts which allowed clients to earn interest on digital assets. That investigation resulted in a multistate settlement in which Connecticut participated. In late 2022, Nexo Capital, Inc. announced that it had permanently ceased U.S. sales of the EIP investments. In a parallel action, on January 19, 2023, the United States Securities and Exchange Commissioner entered an Order Instituting Cease and Desist Proceedings based on the alleged sale of unregistered securities by Nexo Capital, Inc.

The multistate settlement and the SEC action each imposed a $22.5 million penalty against the firm.

As of July 31, 2022, there were 1,069 EIP accounts in Connecticut (1.14 percent of the national total of 93,318) with a savings wallet value of almost $14.8 million (1.84 percent of the national total of $800,260,000). 

The Consent Order alleged that the EIP accounts were securities and that Nexo Capital Inc. violated Section 36b-16 of the Connecticut Uniform Securities Act by failing to register those securities under state law. In keeping with the terms of the multistate settlement, the Consent Order directed Nexo Capital, Inc. to cease and desist from regulatory violations and to pay a total fine of $424,528.30 to Connecticut. The fine would be payable in four installments, with the first being due upon signing, and the balance payable in the succeeding three quarters.