bulgaria

Nexo investigation is not political, Bulgarian prosecutors say

A spokesperson for Bulgaria’s chief prosecutors has denied claims that the investigation was prompted by the company’s political donations.

Siika Mileva, a spokesperson for Bulgaria’s chief prosecutors, has denied political motivations behind the probe against the crypto lending firm Nexo, according to local reports. The comments were made in response to claims that the investigation had a connection to the company’s political donations.

Almost all cases where a prosecution launches an investigation that affects someone’s financial interests results in attacks and accusations, Mileva said. “It has become a national sport to attack the institutions,” he added.

On Jan. 12, a group of prosecutors, investigators and foreign agents searched the company’s offices in the Bulgarian capital city of Sofia. The operation targeted a large-scale money laundering scheme as well as violations of Russia’s international sanctions.

In less than 48 hours after Nexo’s offices were raided, four people were charged with money laundering, tax crimes, computer fraud and unlicensed banking. Two individuals were released on bail of nearly $550,000. The two others remain unfound in Bulgaria and have been declared internationally wanted persons. It’s unclear whether the individuals had a connection with the crypto firm.

According to Mileva, transactions carried out by Nexo amounted to $94 billion in a period of five years. An organized criminal group operating in several countries since the beginning of 2018 has been under investigation, noted the spokesperson.

On Twitter, Nexo complained about the law enforcement raid and said it was preparing a lawsuit against for damages caused by the abrupt police interruption. The company classified the authority’s approach as “kick first, ask questions later”.

According to the company, investigators did not provide a search warrant for hours and never identified themselves to Nexo employees.

We are always cooperating with the relevant authorities and regulators, and we are hopeful that we will have some exciting news in the weeks to come. 7/

— Nexo (@Nexo) January 12, 2023

Nexo operates an investment platform where users can stake and borrow against crypto. Although it has offices in Bulgaria, the firm does not provide services to the country’s residents due to potential regulatory issues. The company was founded in 2018 and has offices in the United Kingdom, Bulgaria and Switzerland.

In December, Nexo announced it would phase out its United States operations due to a lack of clear regulatory cooperation with U.S. authorities.

Bulgarian authorities charge four individuals following raid on Nexo office: Report

Following the Jan. 12 raid on its Sofia offices, Nexo described prosecutors’ actions as a “kick first, ask questions later” approach.

Less than 48 hours after a raid on cryptocurrency lender Nexo’s offices in the Bulgarian capital of Sofia, prosecutors have reportedly charged four people.

According to a Jan. 13 report by Bloomberg, authorities charged four Bulgarian nationals with forming an organized crime group, which may have included activities related to money laundering and unlicensed banking. The country’s National Police Service reportedly seized a number of assets as part of the investigation, including cryptocurrency, cash and computers.

Following the Jan. 12 raid, Nexo described prosecutors’ actions as a “kick first, ask questions later” approach. The company reportedly planned to file a lawsuit seeking compensation for damages caused by police actions, alleging authorities did not show a search warrant or identify themselves to Nexo employees.

“We are always cooperating with the relevant authorities and regulators,” said the lending firm.

George Naydenov, a frontend developer at Nexo’s Sofia office, said on LinkedIn:

“I thank the Bulgarian Prosecutor’s Office for trying, of course, in the most incompetent and pathetic way to take away the work of over 600 people in Nexo including me.”

It’s unclear which individuals and what role they may have held at Nexo were involved in the arrests. The lending firm has roughly 600 employees in Sofia.

Founded in 2018, Nexo operates an investment platform allowing users to stake and borrow against crypto. The company has offices in the United Kingdom, Bulgaria and Switzerland, but reportedly does not offer its services to Bulgarian residents due to potential issues with the local government. In December, Nexo announced that it planned to phase out its services in the United States, citing the lack of a clear regulatory-compliant path forward.

Crypto lender Nexo wants to sue Bulgaria after office raids

Nexo has denied reports that the firm has experienced massive outflows amid office raids and an ongoing investigation against the firm.

Troubled cryptocurrency firm Nexo is planning to sue the Bulgarian government after massive raids at the company’s offices in Sofia.

Nexo has complained about the actions of the law enforcement authorities in response to the investigation against the firm, the Bulgarian News Agency reported on Jan. 13.

The company is reportedly preparing to file a lawsuit against the authorities to seek compensation for damages caused by the abrupt police interruption. One report suggested that investigators did not provide a search warrant for hours, while inspectors never identified themselves.

Nexo believes the raids conducted in its offices yesterday were against the law and demonstrated the “total incompetence of those conducting this shameful action.” Nexo also described the actions against the firm as “local Bulgarian arbitrariness,” which allegedly aimed to “destroy and loot a prosperous business.”

The firm also emphasized that Nexo doesn’t offer any services for Bulgarian residents due to potential issues with the local government. The company also reiterated that it has been compliant with Anti-Money Laundering requirements and sanctions against Russia, in addition to cooperating with major crypto intelligence firms like Chainalysis.

The firm expressed confidence that it will win the lawsuit, which will provide Nexo with compensation for the damage caused by the investigation, stating: “The compensations that Bulgaria will pay after the claims are filed and won by Nexo will be another record-breaking amount of hundreds of millions, but, unfortunately, they will be at the expense of the Bulgarian taxpayer.”

Siyka Mileva, a spokesperson for Bulgaria’s chief prosecutors, said that the investigation against Nexo involved more than 300 police officers, prosecutors and national security agents. She also noted that the probe is currently limited to Bulgaria, with local police officers searching 15 addresses related to Nexo as of Jan. 12. Other reports indicated that some foreign agencies were also involved in the investigation.

*Siyka Mileva and Bulgaria’s cybersecurity officer. Source: The Bulgarian News Agency*

Nexo’s statement came shortly after the company reportedly experienced massive outflows amid reports of an investigation.

According to crypto analytics platform Arkham Intelligence, Nexo has seen “floods of outflows” since the news broke. Blockchain tracker Cielo Finance also reported large withdrawals from Nexo, highlighting transactions with more than 200,000 USD Coin (USDC) leaving the platform on Jan. 12.

A spokesperson for Nexo denied any abnormal outflows to Cointelegraph, though. “The current outflows on the platform that we’re seeing are normal, considering the overall market conditions,” the Nexo representative said. The spokesperson added that the outflows have accounted for 2% of Nexo’s total assets under management of $2.3 billion.

Nexo offices reportedly raided by police in Bulgaria

The investigators have alleged that Nexo is involved in money laundering and violating global financial sanctions against Russia.

Troubled cryptocurrency lender Nexo is facing more pressure from regulators as its offices have been reportedly raided as part of an international investigation.

A group of prosecutors, investigators and foreign agents started searches of Nexo’s offices in the Bulgarian capital, the local news agency Standart reported on Jan. 12.

The operation was reportedly initiated a few months ago, targeting a large-scale financial criminal scheme allegedly involving money laundering and violations of international sanctions against Russia. Citing sources of the Bulgarian National Television, the report alleges Nexo’s involvement in the scheme.

The television also highlighted Nexo’s alleged ties with the government of Bulgaria, specifying that Nexo was co-founded by former parliament member Antoni Trenchev and Georgi Shulev, the son of former deputy prime minister Lydia Shuleva.

Nexo was quick to react to the latest news, taking to Twitter to assure the public that the company has been compliant with global crypto regulations and has enforced strict Anti-Money Laundering and Know Your Customer policies.

“Unfortunately, with the recent regulatory crackdown on crypto, some regulators have recently adopted the kick first, ask questions later approach. In corrupt countries, it is bordering with racketeering, but that too shall pass,” Nexo wrote.

Over the years, we have turned down a lot of business because Nexo never makes compromises with regard to our very stringent anti-money laundering and know-your-customer policies. But we have always known that this is how you build a sustainable business. 1/

— Nexo (@Nexo) January 12, 2023

Founded in 2018, Nexo operates a cryptocurrency investment platform, also allowing users to stake and borrow against crypto. The firm first encountered issues in the United States last year, with the California Department of Financial Protection & Innovation filing a desist and refrain order against Nexo regarding its interest service in September. Nexo eventually decided to gradually cease operations in the U.S. after failing to find a dialogue with local regulators.