Katherine Ross

Nexo filed an arbitration claim against Bulgaria for $3 billion.&nbsp;



The crypto trading platform is seeking payment for both material and reputational damages caused by the Bulgarian investigation announced last year. Nexo, in a press release, also alleged that some “planned business activities” were “abandoned” due to the investigation.&nbsp;



One such venture was a possible funding round and potential IPO on a US stock exchange.&nbsp;



Nexo, however, <a href="https://blockworks.co/news/nexo-crypto-lending-platform-to-cease-us-operations">phased out its US operations</a> back in 2022. At the time, it said that it had engaged in “more than 18 months of good-faith dialogue with US state and federal regulators” but it was unable to assure customers that the regulators were “focused on their best interests.”



“Our growth path has been slowed down and opportunities lost or significantly delayed. I personally promised 10 months ago that we would explore all legal means available to secure financial compensation for Nexo,” Antoni Trenchev, co-founder of Nexo, said.



The arbitration claim was submitted at the World Bank’s International Center for Settlement of Investment Disputes in Washington, DC.&nbsp;



In December, Bulgaria <a href="https://blockworks.co/news/nexo-crypto-lending-platform-to-cease-us-operations">announced that it ended the investigation</a> into Nexo. The investigation — launched in January 2023 — looked into alleged financial crimes. Nexo’s offices were <a href="https://blockworks.co/news/nexo-office-in-bulgaria-raided-in-sanctions-probe">raided in an attempt to uncover various alleged</a> crimes including tax evasion and fraud.&nbsp;



When the prosecutor’s office announced that it was dropping the investigation, it noted that Bulgaria “lacks a corresponding legal regime for the activity related to services with crypto assets,” and “the <a href="https://blockworks.co/tag/nexo">Nexo</a> group companies are not subject to permit, registration or licensing regimes.”



“The dropping of all charges made against Nexo and its executives by the Bulgarian prosecutor’s office, with their confirmation that there were no crimes, unequivocally shows that the whole attack on Nexo was political and should not have happened in the first place,” Trenchev told Blockworks at the time.



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Nexo seeks $3B in damages after Bulgaria investigation

Bessie Liu

The offices of troubled crypto lender Nexo have been raided by Bulgarian officials for alleged financial crimes including money laundering, tax evasion and fraud.



Over 300 officers and regulators have been involved in the investigation, and police have searched over 15 addresses related to Nexo.



Local news website Standart <a href="https://www.standartnews.com/balgariya-krimi/aktsiya-politsiya-atakuva-blgarska-firma-za-kriptovaluti-514115.html" target="_blank" rel="noreferrer noopener">reported</a> that the investigations are part of a larger international operation that is looking at violations of international financial sanctions against Russia, although the probe is currently limited to Bulgaria. 



A Nexo spokesperson told Blockworks that, “they are inquiring about a Bulgarian entity of the group that is not customer-facing but only has operational expense-related functions — payroll, customer support, back office.”



Adding, “the allegations are absurd — we are one of the most stringent entities with regards to KYC/AML. Since the onset of the war in Ukraine we have helped raise millions for the victims there and restricted clients from Russia and sanctioned regions.”



Nexo has also publicly responded to the news on Twitter, assuring that the company has not been involved in any illegal activities.



“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,” the company <a href="https://twitter.com/Nexo/status/1613477462243147776" target="_blank" rel="noreferrer noopener">tweeted</a>.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">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/&mdash; Nexo (@Nexo) <a href="https://twitter.com/Nexo/status/1613477462243147776?ref_src=twsrc%5Etfw">January 12, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Adding, “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.”



The price of Nexo’s token <a href="https://blockworks.co/price/nexo">NEXO</a> dipped by roughly 6% but has since recovered. The token has not participated in the broader crypto market rally in recent days.



Nexo did not immediately respond to Blockworks’ request for comment.



This is a developing story and may be updated.