Nexo Initiates $3 Billion Arbitration Against Bulgaria Over Alleged Wrongful Actions

Cryptocurrency lending platform Nexo has taken legal action against Bulgaria, seeking $3 billion in damages. The move follows accusations of wrongful actions and politically motivated conduct, including unjustified criminal investigations. The allegations stem from events over the past year, involving money laundering probes and dropped charges by Bulgarian prosecutors.

Investigations and Charges Dropped

Bulgarian authorities concluded their Nexo investigation in December 2023, finding no evidence of money laundering. Initially accusing Nexo executives of involvement in organized crime, charges were dropped due to Bulgaria's lack of a legal framework for crypto assets.

Arbitration Claim Filed

Nexo, via its Swiss subsidiary Nexo AG, filed a $3 billion arbitration claim with the World Bank’s ICSID on January 18, 2024. The cryptocurrency lender argues that investigations and charges have harmed its brand and reputation, resulting in the loss of significant business opportunities.

Impact on Nexo

The aftermath of the investigation has significantly affected Nexo's growth path, slowing down operations and causing the loss or delay of opportunities. Co-founder Antoni Trenchev emphasized the commitment to exploring all legal means for financial compensation.

Complications in the United States

Nexo faced additional challenges in the U.S., settling for $45 million with the SEC and NASAA due to the failure to register its Earn Interest Product. This settlement led to product discontinuation in April. The company also decided to wind down U.S. operations in December 2023, citing a lack of regulatory clarity.

Bulgarian Response

The Bulgarian finance ministry acknowledged receiving the arbitration request and stated it would be reviewed in response to Nexo's claim.

Nexo faces hurdles on multiple fronts, emphasizing the need for legal resolution and potential financial compensation.