Bulgaria Charges Four People in Probe Into Crypto Lender Nexo

Emily Nicolle and Slav Okov, Bloomberg News

A Nexo booth during the Bitcoin 2022 conference in Miami, Florida, U.S., on Friday, April 8, 2022. The Bitcoin 2022 four-day conference is touted by organizers as "the biggest Bitcoin event in the world." , Bloomberg

(Bloomberg) -- Bulgarian prosecutors have charged four people as part of an investigation into Nexo, a London-based crypto lender run by a former Bulgarian member of parliament.

The four Bulgarian nationals were charged with forming an organized crime group related to money laundering, unlicensed banking activities, tax and computer crimes, Borislav Sarafov, head of the national investigative service, said at a news conference on Friday. Police have confiscated money, computers and crypto assets of unknown value.

The group has been active since 2018 and has worked in Bulgaria, the UK, Switzerland and the Cayman Islands, according to Siyka Mileva, a spokesperson for the chief prosecutor. The four individuals were not identified. Two of them were detained and may be released on bail, while authorities are still looking for the others, Mileva said.

Antoni Trenchev, 35, co-founded Nexo in 2018 together with Kosta Kantchev, Georgi Shulev and Kalin Metodiev. The company offers crypto trading, custody, loans, interest-earning products and debit card services to more than 5 million users, according to its website.

“There was a flurry of allegations, all of which Nexo vehemently denies as the platform utilizes the highest possible standards with regard to know-your-customer and anti-money laundering practices to ensure to safety of our customers and the enterprise as well,” Trenchev said in a statement to Bloomberg News. He added that all of Nexo’s systems are operational.

Nexo’s office in Sofia was searched on Thursday along with 14 other addresses related to the firm as part of a special investigation involving more than 300 police officers, prosecutors and national security agents, Mileva said earlier. Nexo has about 600 employees in Sofia but doesn’t offer services in Bulgaria, it said in a statement.

The UK’s National Crime Agency provided assistance to the investigation.

Nexo is the latest major cryptocurrency company to fall afoul of authorities, amid a shakeup in the digital asset industry. The US Securities and Exchange Commission sued crypto brokerages Gemini and Genesis on Thursday for allegedly breaking securities laws, while US prosecutors have charged FTX founder Sam Bankman-Fried with fraud following the exchange’s swift collapse in November.

Nexo suffered almost $45 million of net token outflows in a 24-hour period after the raid was announced, according to blockchain data analytics firm Nansen. The compares with a total of about $40 million over the previous seven days, Nansen data shows. A Nexo representative confirmed the outflow figures, adding they are “not something concerning.”

--With assistance from Katharine Gemmell, Muyao Shen and Tanzeel Akhtar.

(Updates with details on the charges starting in second paragraph, Trenchev’s comment in fifth.)