Nexo Pursues $3 Billion Damages Against Bulgaria Over Aborted Investigation

Cryptocurrency lending platform Nexo is seeking $3 billion in damages from the Bulgarian government after a criminal investigation, alleging reputational damage and lost opportunities. The claim, submitted through the International Centre for Settlement of Investment Disputes (ICSID), follows the Bulgarian Prosecutor’s Office dropping charges against Nexo in December 2023. The investigation, initially accusing Nexo executives of participating in an organized criminal group, resulted in no evidence of crimes. Nexo claims the politically motivated probe disrupted business activities, including a potential IPO and a major European football club sponsorship deal. The platform seeks reparations for the substantial reputational and financial harm suffered.

Bulgarian prosecutors launched an investigation into Nexo in January 2023, accusing Nexo executives, including co-founders Kosta Kanchev, Antoni Trenchev, Trayan Nikolov, and Kalin Metodiev, of participating in an organized criminal group for crypto lending. The charges were dropped a year later, citing a lack of legal framework for crypto assets in Bulgaria.

Nexo claims that the investigation tarnished its brand and resulted in significant losses, impacting its growth trajectory and delaying opportunities. The company asserts that despite being cleared of any wrongdoing, the damage to its reputation led to missed business deals and revenue losses. Nexo highlights its collaboration with three U.S. banks on an IPO, valuing the company between $8 and $12 billion, and a pending multi-year deal with a major European football club as ventures affected by the dropped investigation.

Filing the claim through the ICSID, Nexo seeks $3 billion in damages from Bulgaria. The company, represented by U.S. law firm Pillsbury Winthrop Shaw Pittman LLP, aims to address the financial and reputational repercussions caused by what it deems unjustified and politically motivated actions. The claim reflects Nexo’s commitment to exploring all legal avenues to secure compensation for the harm suffered during the investigations.

Despite the challenges posed by the investigation, Nexo remains operational. The platform reached a $45 million settlement with U.S. regulators in January 2023, addressing charges related to its Earn Interest Product. Nexo phased out its U.S. products and services, citing regulatory uncertainties in the country.

Nexo’s arbitration claim against Bulgaria sheds light on the broader challenges faced by cryptocurrency businesses dealing with regulatory scrutiny and legal complexities. The case emphasizes the potential impact of regulatory actions on a company’s reputation and business opportunities. As the crypto industry navigates evolving regulatory landscapes, Nexo’s pursuit of compensation serves as a reminder of the importance of legal recourse to address damages resulting from unfounded investigations.