Nexo Seeks $3 Billion in Damages from Bulgaria Over Investigation
Jessie A Ellis Jan 25, 2024 12:24
Nexo files a $3 billion claim against Bulgaria for damages caused by a dropped investigation, citing material and reputational harm and disrupted business plans.
Nexo, a cryptocurrency lending platform, has taken a significant legal step against the Republic of Bulgaria, seeking $3 billion in damages. This arbitration claim, filed through the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) in Washington, D.C., centers around allegations that Bulgaria engaged in wrongful and politically motivated actions against the company.
The origins of this conflict trace back to an investigation launched by Bulgarian prosecutors in early 2023. Nexo's offices were raided over allegations of participation in an organized criminal group aimed at profiting from crypto lending. Four Bulgarian nationals, including Nexo co-founders Kosta Kanchev, Antoni Trenchev, Trayan Nikolov, and Kalin Metodiev, were charged following these raids. However, in December 2023, the case was dropped due to a lack of evidence and Bulgaria's absence of a legal framework for crypto assets.
Nexo alleges that the investigation was baseless and has had a severe impact on its business operations and reputation. The company claims it was in the process of working with U.S. banks on an initial public offering (IPO), with a valuation estimated between $8 and $12 billion. Additionally, Nexo was reportedly close to finalizing a sponsorship deal with a major European football club, which would have significantly boosted its global exposure. Both of these lucrative opportunities were lost due to the investigation.
Apart from these setbacks, Nexo also faced legal challenges in the United States. The company agreed to a $45 million settlement with the U.S. Securities and Exchange Commission (SEC) and North American Securities Administrators Association (NASAA) over its Earn Interest Product. This led to Nexo discontinuing the product in April and eventually winding down its U.S. operations, citing a lack of regulatory clarity.
Nexo's legal team, led by U.S. law firm Pillsbury Winthrop Shaw Pittman LLP, argues that the investigation by Bulgarian authorities was unjustified and oppressive, leading to significant financial and reputational damage. The claim, filed by Nexo's Swiss subsidiary Nexo AG, seeks to recover lost opportunities and damages caused by the allegations.
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