Bulgaria Concludes Nexo Investigation with No Evidence of Crime Found
Clearing of Charges for the European Crypto Firm Nexo
In a significant development for the crypto community, Bulgarian authorities have officially ended their investigation into the blockchain-based financial services company Nexo.
The prosecutor's office in Bulgaria announced their decision after finding no proof to support allegations of criminal wrongdoing.
Initial Probes Yield No Results
Launched at the beginning of the year, the investigation drew widespread attention following law enforcement raids of Nexo's offices. These dramatic incursions were part of a larger effort to expose potential financial transgressions, including tax evasion and various forms of fraud attributed to the company.
Despite the aggressive approach, a Nexo representative, speaking with Blockworks at the onset of the inquiry, clarified that the target was a non-customer-facing Bulgarian entity within Nexo. The entity's scope was limited to internal operational matters, such as payroll, customer support, and other back-office tasks.
Legal Framework Incongruence
Further complicating the case was an acknowledgment from the Bulgarian prosecutor's office. They stated that the country's current legal framework does not provide clear regulations for activities related to services with crypto assets.
As such, entities under the Nexo group do not fall under traditional permit, registration, or licensing requirements, which rendered the basis for the allegations questionable.
Nexo's Statement and Future Direction
In light of the investigation's termination, Nexo's managing partner, Antoni Trenchev, responded with relief and a measure of vindication. He expressed in a communication with Blockworks that the withdrawal of all accusations confirmed the absences of criminal actions. Trenchev did not hesitate to characterize the ordeal as politically motivated, suggesting that the probe should not have been initiated.
Satisfied with the outcome, Trenchev and Nexo are looking ahead after this chapter. The organization previously initiated its strategic withdrawal from US markets, beginning in December 2022, amid regulatory uncertainties and after engaging with US state and federal regulators for over 18 months. Nexo's departure from the US followed a substantial settlement agreement with the US Securities and Exchange Commission, costing the firm $45 million, and it ceased offering its high-yield earn interest product in the country.
As the world continues to grapple with the complexities of regulating digital assets, the Nexo story stands as a testament to the intricate balance between innovation and compliance in this rapidly evolving landscape.
Coin Club is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.