Prosecutor General of Bulgaria: Nexo Probe Isn't Political

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According to local sources, a representative for Bulgaria’s prosecutor general stated that the probe into cryptocurrency lender Nexo has no political undertones.

Attacking institutions has turned into a national sport, said Siika Mileva, a spokesman.

The business declared last week that it thought the extensive measures taken against it, including a raid on its premises in Sofia and the accusation of four persons of various violations, were politically motivated. Users can borrow money secured by cryptocurrencies through Nexo and earn interest on their cryptocurrency holdings.

The day following the raid, on Friday, Nexo released a statement in which it claimed that “the tabloid media” and other “attempts” had suggested connections between the cryptocurrency company and political campaigns. We Continue the Change, a centrist anti-corruption political party that is presently the second-largest in Bulgaria’s parliament, is one of the parties it has been associated with. The second is called Democratic Bulgaria a coalition of three political parties including Yes, Bulgaria!, Democrats for a Strong Bulgaria, and The Greens.

Nexo also claimed that

[Bulgaria is] the most corrupt country in the EU. They are making AML and tax-related inquiries about a Bulgarian entity of the group that is not customer facing but only has back office functions — payroll, customer support, compliance.

Since no party has been able to obtain enough legislative support to form a government, Bulgaria is currently experiencing a protracted political crisis. This spring, the country is expected to have its fifth general election in as many years. Due to allegations of corruption against GERB’s leader and former prime minister Boyko Borisov, the largest party, “We Continue the Change,” has declined to form a coalition with it.

Members of the Nexo team have donated to political parties “guided by an active civic position; this was done in a transparent manner, and in compliance with the law on political parties,” according to Nexo’s statement.

According to Bulgaria’s national news agency BTA, Mileva stated on Sunday that the case’s pre-trial proceedings did not include the company’s political payments.

The probe involves to crimes like money laundering, tax offenses, and unauthorized banking, as prosecutors explained last week.

The cryptocurrency company rejected all charges, calling the so far-taken steps “shameful,” and accusing the investigators of “incompetence.”

Nexo stated in a statement last Thursday that it does not provide its services in the Republic of Bulgaria, exactly due to the likelihood of being blasted with such ridiculousness, given Bulgaria has a history of corrupt government.

But even in our greatest dreams, this irrational action can go beyond what we could have imagined.

Bulgarian Nexo investigation

In the operation last week, which saw authorities enter Nexo’s offices in Sofia, more than 300 persons were involved. The company claims that agents failed to identify themselves or display badges and that a search warrant was not presented until several hours after the raid had started.

Last Monday, authorities claimed to have proof that at least one user of the network had been designated a financier of terrorism.

According to a local report, the inquiry has purportedly discovered 100 transactions to the Hamas terrorist organization. On Monday, a Nexo representative said that

These assertions are incorrect. To stop such actors, Nexo has the strictest AML regulations in place.

As a result of the inquiry, four people have reportedly been charged with taking part in a criminal organization for the purposes of money laundering, tax fraud, computer fraud, and unlicensed banking. The offenses are said to have occurred in Switzerland, the Cayman Islands, the UK, Bulgaria, and the UK.

According to reports, a bond amount of one million Bulgarian Lev ($555,000) has been set for two of the suspects, while as of last week, investigators were still looking for the other two.

The identity of the four accused have not been confirmed by either Nexo or Bulgarian authorities.

Despite the fact that a Nexo official said the activity was “business as usual,” the report caused a wave of withdrawals from the platform.

Nexo has asserted time and time again that it firmly conforms with laws. On the day of the raid last week, the business claimed in a Twitter thread that it has always gone above and beyond to adhere to AML rules.

Since day 1, we have gone the extra mile to implement cutting-edge solutions to ensure adherence to the highest regulatory standards and simultaneously provide a smooth customer onboarding journey. 2/
— Nexo (@Nexo) January 12, 2023

Antoni Trenchev, a co-founder of Nexo, expressed a similar opinion last week in an email. “We are one of the strictest organizations in terms of KYC/AML,” he claimed.

Additionally, the firm has called Bulgaria “corrupt” in a number of statements.

The company stated in a tweet that “unfortunately, with the recent regulatory crackdown on cryptocurrency, certain regulators have recently embraced the kick first, ask questions later strategy.” It’s almost on the verge of racketeering in corrupt countries, but it too shall pass.

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. 6/
— Nexo (@Nexo) January 12, 2023

In a statement released last Thursday, the corporation said that it will take steps to safeguard both its staff members and the business itself “against the terrible liberties taken by the government.” This will include requesting damages, which the business asserts will cost hundreds of millions of dollars, based on early projections.

An independent foreign auditor will investigate Nexo’s operations in the meantime, a spokesperson of the Bulgarian prosecutor said on Sunday.

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