Crypto Lender Nexo Cries Foul Over ‘Politically Motivated’ Bulgaria Probe

Cryptocurrency lending platform Nexo has filed an explosive $3 billion claim against Bulgaria, accusing the country of making “wrongful and politically motivated actions” that damaged its business prospects.

TLDR

• Crypto lending platform Nexo filed a $3 billion arbitration claim against Bulgaria seeking damages for a canceled criminal investigation against the company
• Bulgarian prosecutors raided Nexo’s offices in January 2023 and opened a probe over alleged money laundering and financial crimes, but dropped the case in December 2022
• Nexo alleges the investigation was politically motivated and destroyed its reputation and shareholder value by scuttling plans for a US stock market listing and a sponsorship deal
• Nexo claims the probe caused reputational and financial damages totaling $3 billion
• The claim was filed with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) which handles disputes between companies and states

The claim centers on a criminal probe launched by Bulgarian authorities in January 2023 that targeted Nexo’s Switzerland-based parent company Nexo AG. Prosecutors raided Nexo’s Sofia offices and lodged accusations of money laundering, organized crime links, and financial fraud – allegations Nexo vigorously denied.

After nearly a year of investigation, prosecutors in December 2022 dropped all charges against Nexo and its executives including co-founder Antoni Trenchev, a former Bulgarian lawmaker. Authorities said they found no evidence to support the allegations of criminal wrongdoing.

However, Nexo alleges the damage was already done. In its $3 billion arbitration filing, the company accused Bulgaria of destroying its reputation and shareholder value, derailing its plans for a U.S. stock market listing and torpedoing a sponsorship deal with a major European football club.

Nexo claims Bulgaria’s “unjustified and oppressive” probe caused severe reputational harm and extensive financial losses. The company filed its claim with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), which adjudicates disputes between corporations and nation-states.

An ICSID ruling against Bulgaria could pressure the country to pay billions in reparations. Nexo co-founder Trenchev said while the claim seeks compensation for Nexo, it also aims to deter abuse of power by regulators who target crypto companies for political reasons rather than evidence of wrongdoing.

With crypto firms frequently blamed for facilitating financial crime, Nexo’s pursuit of restitution from Bulgaria could embolden the industry to confront scrutiny viewed as unfair or heavy-handed. The claim also serves noticed that crypto lending platforms have resources to retaliate forcefully if they believe inquiries overstep or regulations become overly restrictive.