Bulgarian Prosecutors Charges Leveled Against Nexo Executives, Dismisses Evidence of Criminal Activity

The Republic of Bulgaria authorities have terminated the criminal activity charges against the crypto lender Nexo. The Prosecutor’s Office issued a notice dated Friday, December 22, indicating it was halting the criminal proceedings initiated in January this year against Nexo’s quartet. 

Bulgaria Prosecutor Drop Charges Against Nexo 

The prosecutor ruled out the existence of evidence that linked Kosta Kanchev, Antoni Trenchev, Trayan Nikolov, and Kalin Metodiev to alleged money laundering, tax, and computer fraud. The absence of evidence prompted the discontinuation of the criminal proceedings linking four executives of the crypto lender Nexo.

The Friday notice the prosecutor’s office issued indicated that investigators found no evidence that the four Bulgarian nationals were initially charged following the January raid into the Nexos’s offices. The notice detailed that no evidence collected during the raid executed in the Sofia-based headquarters linked the four to money laundering, computer-aided, and tax fraud. The notice discharged charges that labeled the four Nexo executives as belonging to an organized crime group. 

The executives charged by the Bulgarian prosecutor’s officer were arrested for orchestrating organized crime. The prosecutors claimed that starting in 2018, the four Nexo executives ran the organized criminal activity. 

Documents submitted by the prosecutors indicated that the four executives profited from crypto lending services. The notice stated that Bulgaria lacks a legal regime for regulating crypto assets. 

Nexo Product Beyond Bulgaria Regulatory Scope

The announcement issued by the prosecutor’s office demonstrated that the products that Nexo offered did not constitute financial instruments. It added that the services provided to the clients fall beyond the purview of investment services. Since crypto assets differ from current financial instruments, trading digital assets is exempt from regulation.  

Prosecutors delved into the investigators’ discovery that Nexo management was run externally from Bulgaria. Such collaborates with the information disclosed in Nexo’s threats to sue the Bulgaria authorities. 

While Nexo has operating centers within the United Kingdom and Switzerland besides the Sofia office, it has repeatedly ruled out offering services to the Bulgarians. 

Trenchev hailed the move by the Bulgarian Prosecutor’s Office to dismiss all charges leveled against Nexo and fellow executives. He indicates that dropping the case affirms the absence of crimes. It unequivocally demonstrates that the attack at Nexo was politically engineered and should not have happened. 

Reflection of Nexo $45M-Settlement with US Regulators

The January raid targeting its Sofia officer prompted a parallel investigation by the US Securities and Exchange Commission (SEC). Similar investigations were initiated by the North American Securities Administrators Association (NASAA), alleging failure to register the offering. 

NASAA is an international entity that protects consumers against harmful products, people, and organizations when purchasing securities and investment advice. It investigates violations and files enforcement actions, such as the case of Nexo’s involvement in computer fraud, tax, and money laundering crimes besides offering unregistered Earn Interest Products. 

Nexo entered a $45 million settlement with NSAA and the US SEC. The deal sought to settle cases initiated by multiple US securities regulators. Nexo determined the product in April this year. 

Reflecting on the settlement with the US regulators, Nexo indicated in December that it would shut down operations and exit the country. Nexo cited the absence of regulatory clarity in the US when conveying its exit decision it labeled regrettable though necessary. 

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