Trouble for crypto exchange Nexo: investigations in Bulgaria for money laundering and tax violations
Trouble for crypto exchange Nexo: investigations in Bulgaria for money laundering and tax violations

Trouble for crypto exchange Nexo: investigations in Bulgaria for money laundering and tax violations

By Alessia Pannone - 13 Jan 2023

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Recent trouble for the prestigious crypto exchange Nexo: the cryptocurrency lender is being investigated by Bulgarian authorities on charges of money laundering, tax offenses, unlicensed banking, and wire fraud.

The Bulgarian prosecutor’s office is reportedly conducting an investigation in Sofia to defuse Nexo’s alleged criminal activity, according to a machine translation of a statement released on Facebook on Thursday. More than three hundred people are involved in the operation.

The crypto exchange Nexo was founded in 2018 and is recognized as a digital platform offering financial services related to the cryptocurrency sector. In addition to enabling the buying and selling of cryptocurrencies, its main use is to provide a passive annuity of up to 16% APY on cryptocurrencies lent to other users.

The case of crypto exchange Nexo: details of the investigation 

As anticipated, crypto exchange Nexo is currently under investigation for alleged money laundering, wire fraud, and tax crimes. Indeed, in recent hours, the Bulgarian headquarters of the Nexo CEX was raided by local police. 

Nexo co-founder Antoni Trenchev was immediately surprised by the affair, calling the authorities’ allegations as “absurd” and adding that Nexo is one of the most rigorous entities when it comes to KYC and AML. 

According to a Nexo spokesperson, police are reportedly investigating a Bulgarian entity that is not in charge of customers, but of various operational functions, including payroll and customer service.

In addition, according to a Bloomberg investigation, more than 300 police officers, prosecutors, and national security agents are allegedly involved in the operation. In all of this, Siyka Mileva, spokeswoman for Bulgaria’s chief prosecutors, has made searing statements on the matter. 

According to Mileva, London-based Nexo is apparently suspected of money laundering, tax offenses and crimes involving unlicensed banking. Specifically, Mileva stated: 

“The main organizers of the program are Bulgarian nationals and the activity was mainly carried out from the territory of Bulgaria. Evidence has been collected regarding a person who used the platform and transferred cryptocurrencies, who was officially declared as a terrorist financer.”

Finally, an alleged link between Nexo and the world’s most wanted fraudster Ruja Ignatova, the missing founder of the OneCoin Ponzi scheme, is also suggested in the investigation. However, official statements have not yet mentioned this indiscretion.

The Nexo CEX has also been involved in recent weeks in the process of acquiring competitor Vauld, which has since rejected the exchange’s latest offer, raising further doubts about the company’s solvency in the process.

Comments from crypto exchange Nexo on the investigation: the statements

As anticipated, Nexo said in a Twitter thread that it is cooperating with the relevant regulators. Specifically, it said it had strict anti-money laundering (AML) and know-your-customer (KYC) policies and implied that it had been targeted unfairly. 

Indeed, from sources learned through CoinDesk, it appears that Nexo in response to the allegations stated the following: 

“There are authorities in one of the Nexo offices in Bulgaria, which is, as you know, the most corrupt country in the EU. They are making anti-money laundering and tax claims on a Bulgarian entity of the group that does not deal with customers, but only has back office functions: payroll, customer service, compliance. We are one of the strictest entities regarding KYC/AML.”

In addition, crypto exchange Nexo also made important statements via its official Twitter account, which read: 

Moreover, via its Twitter account, Nexo continues: 

So, it seems, crypto exchange Nexo faces accusations and adversity head-on, having nothing to hide, yet everything to prove as to its innocence and transparency.

Anyway, despite the exchange’s defenses, unfortunately, following the news about the investigation, more than $3 million left the company’s platform. In addition, the exchange’s native currency, the NEXO token, fell by about 7%, to 70 cents. Recording, in particular, a current price of $0.72 per NEXO. 

Alessia Pannone

Graduated in communication sciences, currently student of the master's degree course in publishing and writing. Writer of articles from an SEO perspective, with care for indexing in search engines.

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