Nexo sues Bulgaria for $3 billion over failed inquiry

Nexo, a leading crypto lender and bank, has filed a lawsuit against the Republic of Bulgaria, seeking more than $3 billion in damages for wrongful and politically motivated actions against its executives and business.

Bilateral Investment Treaty Violation

The lawsuit, filed on Wednesday at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) in Washington, DC, alleges that Bulgaria violated its obligations under the bilateral investment treaty with Switzerland, where Nexo is incorporated.

According to the lawsuit, Bulgaria launched a series of unjustified and oppressive criminal investigations against Nexo and its co-founders, Kosta Kanchev, Antoni Trenchev, Kalin Metodiev, and Trayan Nikolov, in January 2023. The investigations accused Nexo of money laundering, tax evasion, banking without a license, and computer fraud.

Investigations Closure and Repercussions

However, in December 2023, the Bulgarian Prosecutor’s Office closed the investigations, stating that it found no evidence of any criminal activity by Nexo or its executives. The Prosecutor’s Office also confirmed that Nexo’s products do not constitute financial instruments and do not require a banking license.

Despite the closure of the investigations, Nexo claims that the damage was already done. The company says that the investigations harmed its reputation and brand, caused it to lose customers and investors, and prevented it from pursuing certain business opportunities, such as a potential initial public offering (IPO) in the U.S.

Nexo also claims that the investigations were politically motivated and aimed at suppressing the growth of the crypto industry in Bulgaria. The company points out that the investigations coincided with a wave of regulatory crackdowns on crypto-related activities around the world, following the collapse of FTX and other crypto firms in 2022.

Financial Impact and Compensation

Nexo is seeking $3 billion in damages from Bulgaria, which it says is equivalent to the lost value of its business as a result of the investigations. The company is also seeking interest, costs, and any other relief that the ICSID tribunal may deem appropriate.

Nexo is one of the largest and most successful crypto lenders and banks in the world. It offers crypto-backed loans, high-yield savings accounts, crypto exchange services, and a native token (NEXO) that pays dividends to holders. The company has over 2 million users and manages over $15 billion in assets.

Nexo’s lawsuit against Bulgaria is the largest arbitration claim ever filed by a crypto company against a sovereign state. It is also a rare example of a crypto company taking legal action to defend its rights and interests in the face of hostile regulation.

Sources:

- Crypto Lender Nexo Sues Bulgaria For $3B Over 'Politically Motivated' Investigation, Office Raid 

- Crypto bank files record $3 billion lawsuit against Bulgaria 

- Crypto Lender Nexo Seeking $3B in Damages From Bulgaria 

- Nexo's Money Laundering Investigation in Bulgaria Closed Due to Lack of Evidence: Report