Bulgaria, USAFebruary 17 2024
(1) Position of the Bulgarian magistracy
Nexo is a cryptocurrency exchange that, according to the Bulgarian prosecutor’s office, is allegedly acting as an organized crime ring operating from Bulgaria, Serbia and Cyprus. The company allegedly worked to set up ‘call centers’ and other customer services, with the main objective of engaging consumers and enticing them to invest in the financial products offered by Nexo, including investment in the Nexo token.
According to the Bulgarian prosecutor’s office, the combination of a Bulgarian technological structure (algorithmic software) and a Serbian infrastructure (physical call center) would have allowed the swindle of numerous victims, not only in Europe with testimonies coming from Germany, Switzerland or Austria but also for residents of Canada and Australia. This scheme would involve an amount of several tens of millions of euros. The main accusations that Nexo is facing are related to money laundering, which would have taken place in Cyprus.
On January 12, several of Nexo’s administrative sites in Bulgaria were raided by local law enforcement agencies as part of the opening of an international criminal investigation into possible money laundering, terrorist financing and other dubious or illegal activities. In this case, 17 locations were searched, including Nexo offices and private residences. According to the prosecutor, more than 20 witnesses were interviewed and are now in the witness protection program.
Four individuals of Bulgarian nationality were brought to trial during the preliminary judicial proceedings, accused of operating in an organized gang between 2018 and 2023 in various territories including Great Britain, Northern Ireland, the Swiss Confederation and the Cayman Islands. The charges relate to money laundering, tax crimes and computer fraud.
(2) Position of Nexo
On January 13, Nexo issued a press release refuting all accusations. One of Nexo’s opposition arguments is that the Bulgarian government has political and financial stakes in attacking the company. On the one hand, the case would be the result of a revenge by the Bulgarian government, corrupt and depraved according to Nexo, which would like to exploit the profits generated by the company. On the other hand, Nexo claims that the Bulgarian government is pro-Russian and that the fact that the company immediately supported Ukraine at the beginning of the war is the cause of this legal attack.
“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 has announced that it will take the Bulgarian government to court over what it considers to be a ‘shameful’ raid. The company seems to be confident of a favorable resolution, arguing that the only real consequence of this case will be that Bulgarian taxpayers will have to finance the reimbursem*nt of Nexo by the government.
In other words, not only Nexo intends to obtain damages from the Bulgarian government, which would have damaged the reputation of the company and thus tainted the smooth running of its operations, but Nexo anticipates that the Bulgarian citizens will be the real victims of this case, as the reimbursem*nt of the company will be made through the taxes set up by the government.
(3) Position of the American government
On January 19, the US Securities and Exchange Commission (SEC) reached a settlement with Nexo on the basis of ‘no admission, no denial’. Nexo agreed to compensate the SEC for USD 45 million and to stop offering its undeclared loan products to US citizens.
This means that Nexo has agreed to pay a fine, whether or not the company was responsible for what it was accused of. In this case, the U.S. government was denouncing Nexo’s high-performance products, which were allegedly offered for sale without first being registered with the U.S. regulator.
While this proceeding allows for some obscurity as to Nexo’s actual liability, we feel it is important to note that it is to the company’s advantage to accept the settlement with the SEC if it is indeed guilty of violating the law.
In the SEC’s official statement about Nexo, there is a clear mention of the company’s willingness to regulate its practices, which apparently stopped the sale of its undeclared products in the United States as of February 2022. The position taken by the SEC is that Nexo, by offering crypto products affiliated with banking products, should have and/or should act according to the regulatory framework applicable to traditional financial institutions.
FAQs
Nexo agreed to compensate the SEC for USD 45 million and to stop offering its undeclared loan products to US citizens. This means that Nexo has agreed to pay a fine, whether or not the company was responsible for what it was accused of.
Is Nexo still safe? ›
Secure storage: Nexo partners with Ledger Vault to keep crypto funds secure. Insurance: Nexo also works with Bakkt, a leading provider of secure storage, and maintains a $125 million insurance policy to protect crypto assets. Both Ledger and Bakkt insure funds on Nexo.
What is the Nexo scandal in Bulgaria? ›
The founders and some of the senior managers at Nexo were charged with money laundering and tax and computer fraud, including providing banking services without the necessary license. There were even insinuations about links to the Palestinian terrorist group Hamas.
What is Nexo Exchange? ›
What is the Nexo Exchange? The Nexo Exchange is our hub, which allows you to buy and sell over 60 digital assets, using intuitive order types like Swap, Target Price Swap, Crypto Bundles, and Booster. Through the Nexo Exchange, you can also trade perpetual futures contracts.
Is Nexo a crypto wallet? ›
NEXO allows users to earn interest on their cryptocurrency holdings by depositing them into a NEXO wallet. The interest rates vary depending on the type of currency and the terms chosen. Users can earn up to 16% interest on their crypto assets, which is paid out daily.
Is Nexo closing down? ›
The company has applied to close Nexo Financial Services Ltd. and Nexo Clearing and Custody Ltd as part of a restructuring, according to co-founder Antoni Trenchev. He told Bloomberg that Nexo is rethinking the way it services clients, but that it is not considering a full exit of the UK market.
Is Nexo Exchange in trouble? ›
On January 19, the US Securities and Exchange Commission (SEC) reached a settlement with Nexo on the basis of 'no admission, no denial'. Nexo agreed to compensate the SEC for USD 45 million and to stop offering its undeclared loan products to US citizens.
Is Nexo banned in the US? ›
In addition to monetary relief, today's agreement includes a five-year ban on Nexo offering or selling securities in New York. Under the agreement, Nexo will be required to notify all remaining U.S. investors to withdraw their virtual assets from Nexo's platform by April 1, 2023.
Is Nexo a Russian company? ›
Nexo AG, a Swiss unit of Cayman Islands-based Nexo Capital, alleges the investigation tarnished its reputation and destroyed shareholder value, according to a document filed with the World Bank's International Centre for Settlement of Investment Disputes (ICSID).
Who owns Nexo? ›
Nexo is a centralized lending platform owned by Credissimo, a publicly traded fintech company based in the European Union. It allows users to capitalize on the value of their crypto assets, with a user base of over 4 million across more than 200 jurisdictions.
The Withdraw to Card feature allows you to withdraw the FIATx balances from your Nexo account to your personal debit/credit card at any time. The process does not take long to complete. Important: The feature is available only for linked cards that specifically support Visa Direct or Mastercard Send.
What bank does Nexo use? ›
Nexo is Summit National Bank's preferred digital asset partner for the push toward innovation.
Is Nexo available in America? ›
The Nexo Services are unavailable to citizens or residents of certain jurisdictions, including where restrictions may apply, such as Bulgaria, Estonia, the USA, and Canada.
How trustworthy is Nexo? ›
Customer service is great, withdraws are fast and reliable. My most trusted crypto company without a doubt. I have used maybe 8 different crypto platforms. Some for the amount of different cryptos, some for the smooth interface, some just because its easy to log in to.
What is the ranking of Nexo? ›
NEXO (NEXO) currently ranks 123 among all known cryptocurrency assets. The popularity is based on relative market cap.
What network does Nexo use? ›
You can send and receive crypto assets from and to your Nexo Wallet through the Ethereum, Polygon, BNB Smart Chain, Avalanche, and Fantom networks. Each transaction is conveyed to the blockchain and requires a gas fee to be facilitated. You can find the necessary steps to receive and send tokens using the Nexo Wallet.
Is Nexo allowed in the US? ›
Further, the order states that Nexo announced in December that it was ceasing the EIP in certain states and phasing out all of its products and services in the United States, including permanently ceasing to offer the EIP to all U.S. investors.
Is Nexo allowing withdrawals? ›
You can withdraw any asset from your Nexo account anytime unless: It is a limited asset.
Is Coinbase safer than Nexo? ›
Security is paramount for both platforms, with Coinbase providing an insurance policy to cover digital currency losses and Nexo offering a direct insured wallet service with $100 million insurance through partnerships with BitGo and other custodians.
Is the Nexo card available in the USA? ›
For the time being, the Nexo Card is only available to citizens and residents of the European Economic Area (EEA).
