There is no political aspect to the investigation into cryptocurrency lender Nexo, insisted a spokeswoman for the Bulgarian prosecutor general, according to local reports. In addition, spokeswoman Siika Mileva claims that, by now, attacking institutions has become like “a national sport.”
The large-scale action taken against Nexo, which included a raid on its offices in Sofia and the indictment of four people for various crimes, is politically motivated, according to the crypto lender.
Nexo is an exchange and allows users to earn interest on their cryptocurrencies as well as take out loans secured by cryptocurrencies in exchange for cash.
Nexo investigation: why is it politically motivated?
In a statement on Friday, a day after the raid, Nexo said that the scandal media and other attempts to attack the exchange are motivated by alleged links between the cryptocurrency company and political campaigns.
In fact, one party it has been linked with is “Let’s Continue the Change,” a centrist, anti-corruption political party that is currently the second largest in the Bulgarian parliament. The other is “Democratic Bulgaria,” an electoral alliance of three parties.
Bulgaria has, for some time now, been in the midst of a political crisis, with the country likely to hold its fifth general election in the space of two years this spring, as no party has been able to gain sufficient parliamentary support to form a government.
Nexo’s defense statement regarding their alleged political involvement reads:
“Guided by an active civic stance, Nexo team members have donated to political parties; this was done transparently and in accordance with the law on political parties.”
On Sunday, according to Bulgarian national news agency BTA, Mileva said the company’s political donations were not part of the preliminary proceedings in the case.
As outlined by prosecutors last week, the investigation relates to crimes including money laundering, tax offenses and unlicensed banking operations.
The cryptocurrency company has denied all allegations, calling the actions taken so far “shameful” and stressing the alleged “incompetence” on the part of investigators. Furthermore, in a statement on Thursday the company said:
“Nexo does not offer its services in the Republic of Bulgaria, precisely because of the possibility of being bombarded with such nonsense, as Bulgaria has a record for corrupt authorities. However, the extent to which this irrational action can unfold exceeds even our wildest expectations.”
What happened in the investigation against Nexo?
More than three hundred people were implicated in last week’s operation, which saw authorities enter Nexo’s offices in Sofia. The company claims that officials refused to identify themselves or show badges and did not present a search warrant until hours after the raid began.
For their part, officials said they had evidence that at least one person using the platform had been reported to be financing terrorism. A local report suggests that the investigation allegedly identified 100 transfers to the Hamas terrorist group.
A Nexo spokesperson said Monday that these claims are false, as Nexo has the strictest anti-money laundering policies to protect itself from such actors. Four people were reportedly charged with alleged participation in a criminal group for the purpose of money laundering, tax crimes, computer fraud and unlicensed banking as part of the investigation. The alleged crimes reportedly took place in Bulgaria, the United Kingdom, Switzerland and the Cayman Islands.
In addition, sources also indicate that bail of one million Bulgarian levs ($550,000) has been set for two of the individuals involved, while authorities were still trying to locate the other two as of last week.
Neither Nexo nor Bulgarian authorities have confirmed the identities of the four defendants. The news prompted a flurry of withdrawals from the platform, although a Nexo representative said activity was normal.
In any case, Nexo has repeatedly stated that it is highly compliant with regulations. In fact, in a Twitter thread posted on the company’s account on the day of last week’s raid, the company stated that it has always done its utmost to comply with AML standards.
The company also said in a statement released last Thursday that it will take action to protect its employees and the company itself from the outrageous liberties taken by the authorities. This will include seeking damages, which the company claims will cost hundreds of millions of dollars, according to initial estimates.
Meanwhile, an independent international auditor will review Nexo’s activities, the Bulgarian prosecutor’s representative said Sunday.
The Twitter thread from the exchange: Bulgaria is corrupt
As anticipated, in a thread posted on Nexo’s official Twitter account, the company repeatedly asserted its innocence and transparency and accused Bulgaria of being highly corrupt.
Specifically, it reads:
Despite being fully automated, Nexo has 30+ AML compliance officers who ensure that we retain a real-time picture of our clients, which includes adverse media publications, OFAC sanctions lists, and source & flow of funds, etc. 3/
— Nexo (@Nexo) January 12, 2023
This sentiment was echoed by Nexo co-founder Antoni Trenchev in statements last week in which he said that Nexo is one of the most rigorous entities regarding KYC and AML.
Finally, continuing down the thread on Twitter, one can read:
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