There is no political aspect to the investigation into crypto lender Nexo, a spokesperson for Bulgaria’s Prosecutor General has insisted, according to local reports.
“It has become a national sport to attack the institutions,” the spokesperson Siika Mileva added.
Last week, the company said it believed the large-scale action taken against it, which included a raid on its offices in Sofia and the charging of four people with various offenses, were politically motivated. Nexo lets users earn interest on their cryptocurrencies, as well as take out crypto-backed loans for cash.
In a statement on Friday, a day after the raid, Nexo said that “the tabloid media” and other “attempts” have alleged links between the crypto firm and political campaigns. One party it has been linked with is “We Continue the Change,” a centrist, anti-corruption political party which is currently the second-biggest in Bulgaria’s parliament. The other is “Democratic Bulgaria,” an electoral alliance between three parties: Yes, Bulgaria!, Democrats for a Strong Bulgaria, and The Greens.
Bulgaria is in the midst of a long-running political crisis, with the country likely to hold its fifth general election in the space of two years this spring since no party has been able to secure enough parliamentary backing to form a government. “We Continue the Change” has refused to enter into a coalition with the largest party, GERB, accusing its leader and former prime minister Boyko Borisov of corruption.
“Guided by an active civic stance, members of the Nexo team have donated to political parties; this was done in a transparent manner, and in accordance with the law on political parties,” Nexo’s statement read.
On Sunday, Mileva said the company’s political donations were not part of pre-trial proceedings in the case, according to Bulgaria’s national news agency BTA.
As prosecutors outlined last week, the investigation relates to crimes including money laundering, tax offenses, and banking without a license.
The crypto firm denied all accusations, calling the actions taken so far “shameful,” and alleged “incompetence” on the part of investigators.
“Nexo does not offer its services in the Republic of Bulgaria, precisely because of the possibility of being bombarded with such absurdity, given Bulgaria has a track record for corrupt authorities,” the company said in a statement last Thursday. “However, the extent to which this irrational action can unfold exceeds even our wildest expectations.”
Nexo investigation in Bulgaria
Over 300 people were involved in last week’s operation, which saw authorities enter Nexo’s offices in Sofia. The firm maintains that officials refused to identify themselves or show badges, and did not present a search warrant until a few hours after the raid began.
Officials said last week they had evidence that at least one person using the platform had been declared a financier of terrorism.
One local report suggests the investigation has allegedly identified 100 transfers to the terrorist group Hamas. A Nexo spokesperson told Decrypt on Monday that “these claims are false. Nexo has the most stringent AML policies in place to guard against such actors.”
Decrypt has contacted Bulgarian prosecutors for comment.
Four people have reportedly been charged for allegedly participating in a criminal group for the purpose of money laundering, tax crime, computer fraud, and banking without a license as part of the investigation. The crimes are alleged to have taken place in Bulgaria, the UK, Switzerland, and the Cayman Islands.
For two of those concerned, a bail of one million Bulgarian Lev ($550,000) has reportedly been set, while authorities were still trying to locate the other two as of last week.
Neither Nexo nor Bulgarian authorities have confirmed the identities of the four defendants.
The news prompted a flood of withdrawals from the platform, though a Nexo representative told Decrypt the activity was “business as usual.”
Nexo has repeatedly said it strongly complies with regulations. In a Twitter thread posted to the company’s account on the day of last week’s raid, the firm said it had always gone the extra mile to comply with AML standards.
Since day 1, we have gone the extra mile to implement cutting-edge solutions to ensure adherence to the highest regulatory standards and simultaneously provide a smooth customer onboarding journey. 2/
— Nexo (@Nexo) January 12, 2023
This sentiment was echoed by Nexo co-founder Antoni Trenchev in an email sent to Decrypt last week. “We are one of the most stringent entities with regards to KYC/AML,” he said.
The company has also characterized Bulgaria as “corrupt” in multiple statements.
“Unfortunately, with the recent regulatory crackdown on crypto, some regulators have recently adopted the kick first, ask questions later approach,” the firm said in a tweet. “In corrupt countries, it is bordering with racketeering, but that too shall pass.”
The business has said in a statement issued last Thursday that it will take actions to protect its employees and the company itself “from the outrageous liberties taken by the authorities.” This will include filing for damages, which the company claims will cost hundreds of millions of dollars, according to initial estimates
Meanwhile, an independent international auditor will look into Nexo’s activities, the Bulgarian prosecutor’s representative said on Sunday.