After unsuccessful criminal investigations in Bulgaria, the cryptocurrency lending platform Nexo is seeking $3 billion in damages from the government.
Directly communicating with Cointelegraph on January 24, Nexo elaborated on the particulars of its $3 billion arbitration claim against the Republic of Bulgaria.
It has lodged a claim with the International Centre for Settlement of Investment Disputes (ICSID), which is operational out of Washington, D.C., and is a subsidiary of the World Bank.
In December 2023, Bulgarian prosecutors dismissed the case against Nexo, as previously documented. They concluded that the raid of Nexo’s offices at the start of that year yielded no substantial evidence implicating four Bulgarian nationals in the offenses sought.
Initially, prosecutors charged that between 2018 and 2023, Nexo executives were members of an organized criminal group whose objective was to profit from cryptocurrency lending.
Originally set in the aftermath of the January 2023 arrests were Kosta Kanchev, Antoni Trenchev, Trayan Nikolov, and Kalin Metodiev, all of whom are Bulgarian nationals and co-founders of Nexo.
As one of the grounds for withdrawing the charges, the prosecution listed Bulgaria’s absence of a legal framework governing crypto assets.
On January 18, Nexo, via its Swiss subsidiary Nexo AG, submitted legal documents to the ICSID. Nation-states and international investors engage the institution to mediate legal disputes.
Initial estimates for Nexo’s initial public offering on a significant stock exchange ranged from $8 billion to $12 billion, according to the company’s assertions. Three U.S. banks were reportedly collaborating with Nexo on the offering.
Additionally, the organization asserts that it was nearing completion of a multi-year agreement with a prominent, unnamed European football club, which would have provided Nexo with access to over 330 million supporters across the globe.
Despite being permitted to continue operations, Nexo had suffered due to the dropped investigation, according to a statement from Trenchev.
Our expansion trajectory has been impeded, and there have been instances of lost or substantially postponed opportunities. “Ten months ago, I made a personal commitment that we would diligently pursue all lawful avenues to obtain monetary restitution for Nexo,” Trenchev stated.
According to a distinct Reuters report, the Bulgarian Ministry of Finance has confirmed receipt of an ICSID arbitration request undergoing review.
Multiple U.S. state securities regulators had filed lawsuits against Nexo for failing to register the offer and sale of its Earn Interest Product. In response to the January raid, the company reached a $45 million settlement with the U.S. Securities and Exchange Commission and the North American Securities Administrators Association. This agreement resolved the cases brought forth by these bodies. In April, the platform discontinued the product.
Nexo, the lending institution, declared its intention to cease activities in the United States in December, after the resolution with U.S. regulators. The company stated that its ultimate decision to withdraw from the United States was due to “a lack of regulatory clarity” in the country.
