Early this morning on Thursday, January 12th, 2023, the prosecutor's office and the State Agency for National Security (SANS) launched a raid on buildings linked to Bulgarian crypto-bank Nexo.
While no charges have yet been filed, the prosecutor's office has said the operation conducted today was aimed at a money-laundering scheme, financial and tax crimes, and circumvention of international sanctions against Russia. Prosecutors say they have been working on the case for months and more than 300 people have been involved in the investigation.
The Bulgarian investigation comes after months of heightened interest in Nexo by international regulators and prosecutors in the US. The below mentioned cases are probably not directly related to the Bulgarian prosecutor's investigation, but they do manage to show the complexity of Nexo's operation.
Of the prosecution's claims, the one arousing greatest interest centers on claims of Nexo's possible assistance in circumventing sanctions against Russia and financing terrorist activity. While there has been no further information, or official accusations so far, cryptocurrencies have long proven to be the preferred choice for this type of financing.
A brief timeline
2017 - Nexo is founded by former co-owner of "Credissimo" Kosta Kanchev, former MP from Reformatorski Bloc Antoni Trenchev and Georgi Shulev.
2019 - Shulev leaves the company and soon after the co-founders begin a legal battle with each other.
March 2020 - Users say that on the night of March 12-13, when cryptocurrencies crashed by 50%, Nexo changed its rules overnight to delete a clause that customers "retain 100% ownership of their digital assets".
July 2020 - Nexo is accused on social media of trying to crash the price of the cryptocurrency Chainlink by fabricating a false report made by its employee Simeon Rusanov, Head of Research at Nexo.
December 2020 - Nexo liquidates the positions of all its clients who had withdrawn loans secured against the Ripple cryptocurrency. This leads to the first major lawsuit against the company, Jeong vs. Nexo in the Court of California.
September 2021 - New York State Attorney's Office sends a letter to suspend Nexo's operations in the state.
September 2022 - New York begins legal proceedings against Nexo, with charges of unlicensed banking and failure to comply with the work ban. Seven other states ban Nexo's deposit product.
November 2022 - Three Irish entrepreneurs file a lawsuit against Nexo. They accuse the company of freezing their assets worth a total of 126 million dollars and subsequently forcing them to sell a large part of them at a 60% discount.