Bulgaria clears Nexo of financial crime allegations

abdelaziz Fathi

The Prosecutor’s Office of Bulgaria has concluded its investigation into UK-based crypto lender Nexo, finding no evidence of money laundering, tax crimes, computer fraud, or operating banking services without a license.

This decision marks the end of the case that began with a high-profile raid on Nexo’s offices in January. The investigation, initially driven by allegations of involvement in an organized crime group operating in Bulgaria, the UK, Switzerland, and the Cayman Islands since 2018, has now been closed.

The main rationale for the dismissal, as stated by the prosecutor’s office, is the lack of a regulatory framework in Bulgaria concerning cryptocurrency assets. Consequently, Nexo’s activities, which revolved around services with crypto assets, did not fall under any existing financial or investment instrument laws in the country.

This closure comes amidst a broader context where Nexo faced scrutiny from various U.S. regulatory bodies. However, a settlement reached with the U.S. Securities and Exchange Commission (SEC), among others, concluded that Nexo did not engage in fraudulent or deceptive practices. This settlement also ended all administrative proceedings against Nexo in eight U.S. states.

The move came after Nexo paid $50 million in fines to settle charges from the federal and state regulators for failing to register its crypto asset lending product. Nexo reached a resolution in January after facing cease-and-desist orders from multiple states over its interest-earning products.

Eight US state regulators highlighted that Nexo promotes annual interest rates of up to 36% on crypto deposits, which are significantly higher than rates for short-term, investment-grade, fixed-income securities or bank savings accounts.

The initial charges against Nexo co-founders Antoni Trenchev, Kosta Kanchev, Kalin Metodiev, and Trayan Nikolov centered around their alleged participation in an organized criminal group. The Bulgarian raid in January, described by Trenchev as “absurd” at the time, and a subsequent lawsuit from a California user accusing Nexo of fraudulent loan practices, added to the company’s legal challenges.

Meanwhile, Nexo registered its business as a virtual currency operator in Poland, which enables its European-based entity to provide services to the country’s residents lawfully.

While most crypto lenders were getting caught up in the chaos gripping the crypto world lately, Nexo has offered to acquire rivals. The company also gave a letter of intent offering to buy Celsius, another crypto lending firm, but the latter refused its offer.

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