Nexo Files $3 Billion Claim Against Bulgarian Government Following Dropped Crypto Crime Investigation
Summary:
Cryptocurrency lending platform Nexo has filed a $3 billion arbitration claim against the Bulgarian government following dropped criminal investigations. The case against Nexo dropped in December 2023, citing a lack of evidence against the four Bulgarians involved. The dispute was passed to the International Centre for Settlement of Investment Disputes, located in Washington, USA. Despite the case's dismissal, Nexo claims the situation damaged its growth and delayed opportunities. The company even alleged that it had been about to embark on an initial public offering and a significant contract deal. Besides, after a raid, Nexo also had to settle a $45-million case with US regulators for failing to register its Earn Interest Product.
Nexo, a cryptocurrency lending platform, is seeking $3 billion in damages from the government of Bulgaria due to botched criminal investigations. The information about Nexo's arbitration claim, announced via Cointelegraph on January 24, states that the claim was filed via the World Bank's International Centre for Settlement of Investment Disputes (ICSID), situated in Washington, USA.
In December 2023, Bulgarian prosecutors dismissed the case against Nexo, citing lack of proof of any illegal activities conducted by four implicated Bulgarians following a search of Nexo's premises earlier that year. Initially, it was claimed that these Nexo officials were part of a criminal syndicate from 2018 to 2023, seeking to profit from crypto lending.
The individuals initially caught up in the investigation were Nexo co-founders and Bulgarian nationals Kosta Kanchev and Antoni Trenchev, as well as Trayan Nikolov and Kalin Metodiev. The prosecutors accentuated the absence of a crypto asset legislation in Bulgaria as one of the key reasons for dismissing the case.
The claim submission to ICSID by Nexo was via Nexo AG, its Swiss subsidiary, on January 18. Primarily, ICSID handles legal disputes between international investors and countries. Nexo has alleged that it was in collaboration with three American banks for an initial public offering on a prominent stock exchange valuing them between $8 and $12 billion. Nexo also said that it was close to securing a multi-year contract with a large, anonymous European soccer team, providing access to more than 330 million fans globally.
In a statement, Trenchev acknowledged that while Nexo could still operate, the dropped investigation had negatively impacted the company. He stated that their prospects for growth got hampered and certain opportunities got lost or considerably delayed.
In other news, a separate report from Reuters mentioned that Bulgaria's finance ministry confirmed receiving an arbitration request from ICSID, which is now under review. After the raid in January, Nexo consented to a $45-million settlement with the U.S. Securities and Exchange Commission and the North American Securities Administrators Association as it didn't register the offer and sale of its Earn Interest Product. Owing to this, multiple state securities regulators in the US had initiated cases that were settled by the agreement. The said product was discontinued in April.
The settlement with the American regulators was subsequent to a statement from Nexo in December, where the lending company mentioned its plan to cease operations in the country due to "a lack of regulatory clarity". Ultimately, this uncertainty prompted Nexo to pull out of the United States.
Published At
1/24/2024 2:44:12 PM
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