Cryptocurrency lending platform Nexo is seeking $3 billion in damages from the Republic of Bulgaria following the collapse of criminal investigations against the company. The claim, detailed by Nexo in correspondence with Cointelegraph on Jan. 24, has been submitted to the International Centre for Settlement of Investment Disputes (ICSID) of the World Bank in Washington, D.C.
Bulgarian prosecutors dropped their case against Nexo in December 2023, finding insufficient evidence to support charges against four Bulgarian nationals linked to Nexo. The initial allegations accused Nexo executives of involvement in an organized criminal group between 2018 and 2023, purportedly aimed at profiting from cryptocurrency lending.
The dropped charges were partly attributed to Bulgaria’s lack of a legal framework for regulating crypto assets. Nexo, through its Swiss subsidiary Nexo AG, lodged its claim with the ICSID on Jan. 18, seeking compensation for the impact of the investigation on its business.
Nexo alleges that the failed investigation has impeded its growth and led to missed opportunities. The company claims it was in talks with three U.S. banks for an initial public offering (IPO) with an estimated valuation of $8 to $12 billion. Additionally, Nexo asserts it was on the brink of finalizing a multiyear partnership with a major European football club, potentially reaching over 330 million fans globally.
Antoni Trenchev, one of Nexo’s co-founders, expressed disappointment at the setback caused by the investigation. “Our growth path has been slowed down and opportunities lost or significantly delayed,” Trenchev stated. He reaffirmed Nexo’s commitment to pursuing legal recourse for the damages suffered.
The Bulgarian finance ministry has acknowledged receipt of the arbitration request from the ICSID, indicating that the claim will undergo review.
This development comes after Nexo reached a $45 million settlement with the U.S. Securities and Exchange Commission (SEC) and the North American Securities Administrators Association (NASAA) for failing to register its Earn Interest Product. The settlement resolved cases brought by multiple U.S. state securities regulators, prompting Nexo to discontinue the product in April.
Nexo’s decision to wind down its operations in the U.S. was announced in December 2023, citing regulatory uncertainty as the primary reason for its exit from the market.
(Source: Reuters | CoinDesk | Decrypt)
