Cryptocurrency lending firm Nexo is reportedly pursuing a claim for $3 billion in damages against Bulgaria. This action stems from a halted criminal probe that Nexo claims disrupted its planned U.S. stock market debut and a potential soccer sponsorship agreement. Nexo AG, a Swiss division of the Cayman Islands-headquartered Nexo Capital, argues that the Bulgarian investigation damaged its reputation and significantly diminished shareholder value.
Nexo, a Crypto Lender, Has Sued Bulgaria Seeking $3Bn in Damages
The claim was filed with the International Centre for Settlement of Investment Disputes (ICSID), a part of the World Bank based in Washington, D.C. ICSID, known for arbitrating disputes between global investors and states, registered the case on January 18, as indicated on its website.
The Bulgarian finance ministry acknowledged receiving an arbitration request from ICSID. This request is currently under review by a specialised inter-departmental committee, which will recommend further actions. The ministry emphasised that any communications regarding this matter should not be interpreted as an admission of the claims’ validity or acceptance of any arbitral jurisdiction.
In January 2023, Bulgarian prosecutors initiated an investigation into Nexo AG, involving raids in Sofia and charges against its founders for various offences, including money laundering and computer fraud within an organised crime group.
However, this case was dismissed last month due to a lack of evidence of criminal activity, as prosecutors cited the absence of a legal framework for crypto asset services in Bulgaria.
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Nexo, co-founded by ex-Bulgarian lawmaker Antoni Trenchev, has consistently denied any wrongdoing and suggests the investigation was driven by political motives—a claim prosecutors have previously refuted, as reported by the local news agency BTA.
This legal action by Nexo is notable, especially given U.S. regulators’ increased scrutiny of crypto firms for alleged illicit activities. It’s rare for a crypto company to seek compensation from a country for a discontinued investigation.
ICSID has a history of ordering various countries, including Pakistan, Ecuador, and Venezuela, to pay substantial damages to corporations. However, Reuters could not independently verify the specifics of Nexo’s claimed damages.
Founded in 2018, Nexo phased out its U.S. operations last year and agreed to a $45 million settlement with the U.S. Securities and Exchange Commission and state regulators for failing to register its crypto asset lending product.
