Bulgarian authorities concluded the investigation of Nexo finding no evidence of illicit activities
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Bulgarian Prosecutor’s Office recently announced that it has concluded its investigation of the UK-headquartered crypto lending company, Nexo. The investigation has yielded no evidence of any illicit activities at the firm, including tax-related crimes, computer fraud, money laundering, or even offering banking services without proper licensing.
As a result, Bulgaria has officially cleared Nexo of any financial crime allegations.
Nexo was cleared of financial crime allegations
The Prosecutor’s Office’s decision marks the end of a lengthy case that started in January of this year. At the time, the authorities had conducted a high-profile raid on Nexo’s offices. The raid was conducted due to allegations that the company may have been involved with an organized crime group that operates throughout Europe.
Apart from Bulgaria, the group is believed to be active in the UK, Switzerland, and even the Cayman Islands. Their activities have been traced back to 2018, and while Nexo was believed to be involved with the group, the investigation found no evidence that this was actually the case.
According to the prosecutor’s office, the main rationale for the dismissal is the lack of a local regulatory framework that concerns digital currencies. As a result, Nexo’s activities in the country — primarily revolving around services with crypto assets — do not fall under any existing investment instrument or financial laws in Bulgaria.
Nexo faces regulatory scrutiny in the US
The investigation into Nexo is only a part of the company’s troubles with global regulators, however. In the US, for example, the company faced scrutiny from a variety of regulatory bodies. However, it is also worth noting that Nex managed to reach a settlement with the US SEC, as well as other regulators, which leads to the conclusion that the firm did not engage in any deceptive or fraudulent practices.
In fact, because of the settlement, the firm managed to end all administrative proceedings in eight US states.
The main issue that Nexo was facing in the US was the fact that it failed to register its crypto asset lending product. To settle the matter, the company had to pay $50 million in fines. But, apart from not being properly registered, the regulators have seemingly concluded that the offering is legitimate.
Nexo managed to reach a resolution in January, after it received a cease-and-desist order from multiple states due to its products. The eight states that started administrative proceedings highlighted that Nexo promoted annual interest rates that could go as high as 36% on crypto deposits. These rates are much higher than what is offered for short-term, investment-grade, fixed-income securities or bank savings accounts.
As for the initial charges against the company’s co-founders, including Kosta Kanchev, Kalin Metodiev, Antoni Trenchev, and Trayan Nikolov, all centered around their supposed involvement with organized crime. Trenchev even described the January raid in Bulgaria as “absurd.” Meanwhile, the company also faced a lawsuit from a Californian user who accused the firm of fraudulent loan practices.
However, since Nexo managed to register its company as a virtual currency operator in Poland, it can, in fact, provide services to the country’s residents lawfully.
