Today the Bulgarian Prosecutor’s office announced that the Bulgarian offices of cryptocurrency lender Nexo had been raided “with the aim of neutralizing illegal criminal activity.” Bulgarians Kosta Kantchev and CEO Antoni Trenchev founded Nexo. Kantchev was previously Trenchev’s boss at Bulgarian consumer credit company Credissimo.
“A client of the platform who transferred cryptocurrency has been officially classified as an organizer of terrorist activity,” said Svetlio Vasilev, who leads the Cybercrime division. He added that nobody has charged as yet, but it was searching 15 premises and additional persons of interest are being uncovered.
The investigation involves 300 personnel, including 35 investigators from various government departments such as the police and National Security Service.
In response to the allegations, Nexo took to Twitter, stating it has more than 30 AML and compliance staff and the blockchain is terrible for illicit financing because of its traceability.
It went on to say, “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.”
Nexo currently has assets under management of $2.4 billion, sharply down from $15 billion in mid-2021.
Major competitors such as BlockFi and Celsius are both now bankrupt following the crypto crash. Nexo is trying to acquire Singapore competitor Vauld which is also involved in an insolvency process. Vauld has terminated negotiations.
In September last year, the New York Attorney General filed a lawsuit against Nexo, alleging its exchange and lending products require a securities broker-dealer license and a commodities broker-dealer license which it does not have.
We conducted a mini-investigation into Nexo in early 2021. A the time, its website didn’t show any licenses but said it was regulated. We contacted support asking by whom or in what country it was regulated, and we were told that information was unavailable and there was no way to find out. However, it updated its website a month or so later, disclosing additional information.