Nexo demands $3 billion in damages over canceled Bulgarian investigation

Nexo, a crypto lending firm, said on Jan. 24 that it aims to obtain $3 billion in damages from Bulgaria over a cancelled criminal investigation.

The company said in a statement:

“[Nexo has] filed an over $3 billion ICSID arbitration claim against the Republic of Bulgaria for damages and lost opportunities caused by the country’s wrongful and politically motivated actions … involving unjustified and oppressive criminal investigations, subsequently dismissed for lack of merit.”

Bulgarian prosecutors initially launched an investigation into Nexo AG over one year ago in January 2023. At that time, authorities raided the firm’s offices and charged four Bulgarian individuals with money laundering, tax fraud, and computer fraud. Authorities also alleged violations of Russian sanctions.

In its current press release, Nexo said that the company and its management were cleared of all wrongdoing on Dec. 21, 2023. Nevertheless, it said that the charges damaged its brand and reputation, harmed its investments in Bulgaria, and resulted in the loss of several planned business opportunities.

The company has filed an arbitration claim with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). Records from ICSID indicate that Nexo filed the claim on Jan. 18 but provide few other details.

According to separate reports from Reuters, Bulgaria’s finance ministry confirmed that it has received the arbitration request from ICSID and said that the request will next be reviewed by an inter-department committee. However, Bulgaria’s finance ministry stated that its acknowledgement of the request does not mean it admits to Nexo’s claims or has accepted any arbitration jurisdiction.

Nexo’s growth has been impacted

Nexo’s co-founder, Antoni Trenchev, affirmed that the company can continue operations but said that the firm will experience reduced growth.

Nexo noted that it had been working with three major U.S. investment banks on a funding round and IPO that could have created a valuation of up to $12 billion. It said this effort was impacted by charges and had to be abandoned.

Nexo also said that the charges arrived days before it planned to sign a multi-year partnership with a European football club, including a club-branded payment card. Though Nexo did not identify the club involved in the partnership, a potential partnership between Nexo and FC Barcelona was reported in October 2022, months before the investigation began.