Nexo makes plans to shut down two subsidiaries in the UK amid regulatory crackdown

Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.

Nexo, a firm offering cryptocurrency lending services, plans to shut down its two subsidiaries in the United Kingdom. The two subsidiaries are Nexo Cleaning and Nexo Financial Services Limited. The plans by Nexo to shut down these two companies were revealed in a regulatory filing with the UK Companies House.

Nexo plans to shut down UK subsidiaries

Bloomberg reported the plans by Nexo to shut down these UK units. The co-founder of the DeFi lending firm, Antoni Trenchev, said the company was not planning to abandon its European operations.

According to the company, it would participate in restructuring and develop a new way of delivering services to clients based in Europe. The lender is abandoning its operations in the UK amid an ongoing legal battle in Bulgaria.

In January this year, prosecutors in Bulgaria commenced investigations into Nexo. The lender was accused of several shortcomings, such as its failure to implement anti-money laundering policies and failure to comply with the sanctions against Russia.

As part of the investigations against the lender, the local investigators in Bulgaria partnered with foreign agents to raid the Bulgarian offices of Nexo. The raid led to a probe of 15 offices belonging to the lender. The prosecutors have also said that one of the clients at Nexo was accused of conducting financial terrorism.

According to local media reports, Bulgaria’s Prosecutor General, Siika Mileva, alleged that the co-founders of Nexo operated shell companies. The two individuals are Bulgarians. According to the prosecutor, Nexo has processed more than 94 billion euros in transactions over the last five years.

Nexo has reacted to this development on Twitter. The lender posted a lengthy tweet accusing the prosecutors of charging the company of with “the kick first, ask questions later approach.” The firm has also said that it rejected multiple business opportunities because it failed to remain compliant with the strict AML and know-your-customer policies put in place by regulators.

The statement by Nexo further said that “despite being fully automated, Nexo has 30+ AML compliance officers who ensure that we retain a real-time picture of our clients, which includes adverse media publications, OFAC sanctions lists, and a source & flow of funds, etc.”

Nexo settles with US regulators

Nexo is not only being targeted by regulators in Bulgaria but also in the United States. In the US, Nexo made a $45 million penalty payment to the US Securities and Exchange Commission (SEC). The lender also settled with other state regulators after the SEC accused the platform of promoting the sale of cryptocurrencies that were ranked as unregistered securities.

Out of the penalty that Nexo paid, the SEC received $22.5 million, while the remaining amount went to the state financial market regulators. The crypto lender also paid another $1.5 million to the State of New York for the services provided through the Nexo Exchange.

About Ali Raza PRO INVESTOR

Ali is a professional journalist with experience in Web3 journalism and marketing. Ali holds a Master's degree in Finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of leading cryptocurrency publications including Capital.com, CryptoSlate, Securities.io, Invezz.com, Business2Community, BeinCrypto, and more.