The Bulgarian authorities have officially closed their investigation into the crypto lending platform Nexo, citing a lack of evidence to support the allegations. According to the Bulgarian News Agency, the Prosecutor’s Office stated that cryptocurrencies are not regulated and the products offered by Nexo do not fall under the category of financial instruments.
Prosecutors were unable to establish any serious charges against Nexo, despite earlier raids at the company’s Bulgarian offices. The investigation, which began earlier this year, alleged various offenses including tax evasion, operating without a license, money laundering, and computer fraud. The focus was on four Nexo executives – Kosta Kanchev, Antoni Trenchev, Kalin Metodiev, and Trayan Nikolov.
However, the prosecutor’s office found no evidence of money laundering, tax evasion, or computer fraud. They also could not prove that Nexo was conducting banking activities without a license.
Antoni Trenchev, Co-founder and Managing Partner of Nexo, expressed relief at the dropping of all charges and stated that it was a vindication for all legitimate actors in the crypto industry. He also emphasized that the entire attack on Nexo was politically motivated and should never have happened.
The questionable model of crypto lending was also brought into question during the investigation. Nexo offers high interest rates of up to 16% on crypto deposits, and has already paid out over $200 million in interest to its 6 million users. The platform also offers services such as purchasing and exchanging cryptocurrencies, borrowing against crypto deposits, and a payment card.
Nexo has also faced regulatory issues in the United States, where it settled with federal and state regulators for a total of $46.5 million. The US authorities deemed Nexo’s ‘Earn Interest Product’ as a security, and the company agreed to stop offering the product as part of the settlement.
In addition, the Bulgarian authorities noted that Nexo operated online in the country and most likely had operations outside of Bulgaria.
As the investigation comes to a close, it is clear that Nexo has been cleared of any wrongdoing. This is a positive development for the crypto industry as a whole, as it shows that legitimate companies are being targeted unfairly. With the growing popularity of cryptocurrencies, it is important for regulators to have a clear understanding of the industry and its products before making any accusations.
