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Bulgaria's Prosecutor's Office closes the investigation into "Nexo" crypto currency platform
Bulgaria’s Prosecutor’s office said on December 22 that it closed the investigation into cryptocurrency firm Nexo after finding no evidence of money laundering, tax crimes, computer fraud, and providing banking services without a licence.
During the investigation, four persons were charged as defendants - Kosta Kanchev, Antoni Trenchev, Kalin Metodiev and Trayan Nikolov. The charges are that in the period from 2018 to January 2023, the four participated in an organized criminal group established for a self-serving purpose.
Kanchev and Trenchev are also accused of having carried out banking transactions on their own account through the online platform "Nexo" between June 2018 and January 2023, without authorisation under the Credit Institutions Act. They engaged in lending and deposit-taking by providing cash loans in US dollars, British pounds and euros to individuals and commercial companies in return for interest, as well as deposits against payment of interest.
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In the course of the investigation, a number of witnesses were questioned, including a witness with a secret identity.
The supervising prosecutors have concluded that it is not necessary to appoint an expert, for which the Supreme Judicial Council has authorised the Prosecutor’s Office to incur an expenditure of USD 500,000.
As at 2018, and at present, there is no corresponding legal regime in the country for activities related to services with cryptoassets. It is not regulated and the companies of the Nexo Group are not subject to any permitting, registration or licensing regimes. Virtual currency is not regulated in the country as legal tender and its activities do not fall within the classification under the Payment Services and Payment Systems Act.
From the testimony of witnesses it was established that virtual currencies are not regulated in the territory of the Republic of Bulgaria. According to a 9 January 2019 report by the European Banking Authority, cryptoassets are not recognised as currency, deposits or other repayable funds in any EU country.
The analysis of the witnesses interviewed in the case also revealed that the activities of "Nexo" were carried out through an online platform, probably operated outside the country.
In the meantime, the investigation has established that the regulatory authorities of the US states of California, Kentucky, Maryland, Oklahoma, South Carolina, Washington and Vermont have initiated administrative actions against Néxo for conducting banking activities and providing financial services without a licence.
At the same time, a final resolution was reached on January 19 between Nеxo and the U.S. Securities and Exchange Commission (SEC), the North American Securities Administrators Association (NASAA), comprised of all 50 U.S. states and three territories, the New York Attorney General (NYAG), the Texas Department of Banking, the Alaska Department of Banking and Securities, and the Washington Division of Consumer Services Supervision. According to the document, Nexo did not engage in fraudulent or deceptive business practices, and there is no evidence that any of the company's customers were harmed or misled about the company's financial condition. The settlement terminates all administrative proceedings against the company in eight US states.
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On the basis of everything gathered in the case, the team of supervising prosecutors concluded that there was no evidence of committed crimes. The facts do not establish the existence of a criminal association indicating structure and permanence.
There is no evidence of criminal activity in various forms of complicity for the purpose of carrying out banking activities for hire without appropriate authorisation. There was also no evidence of money laundering. No evidence of tax offences or computer fraud was found against the defendants, either.
According to the Prosecutor’s Office, the products offered by “Nexo” do not constitute financial instruments. The provision of services to clients in respect of these products does not fall within the scope of investment services. Given that crypto assets are currently not financial instruments, trading in them is also not subject to regulation.
The supervising prosecutors have concluded that no crime has been committed and have discontinued the criminal proceedings.
One of the accused, Antoni Trenchev, commented on the decision in his Facebook account.
"Logical end - the investigation against Nexo is over. No crimes. No surprise either. In a truly rule of law such a raid would not have been possible in the first place," he wrote.
The investigation began after a raid in mid-January this year at the company's offices in Sofia. At the time, Prosecutor General’s spokesperson, Siyka Mileva, said the crypto bank was operating on the basis of "shell companies". More than 3.5 million transactions were found, Svetoslav Vassilev of the national investigation said at the time. It was announced that over 300 people were working on this probe, including 35 investigators from the national investigation, SANS and the gendarmerie.
Money laundering, tax and other crimes are being investigated. Over $94 billion has passed through the platform in recent years, Mileva said. One of the clients is a man linked to terrorist financing, she added at the time.
Source: BTA
Images: archive, BGNES
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