A Bulgarian office belonging to crypto lender Nexo has been raided by prosecutors as part of an investigation into money laundering and other offences, as global authorities step up their scrutiny of companies that lend customers’ crypto assets in search of big returns.
The probe of Nexo, which is based in the UK but has operations in Bulgaria, was taken “with the aim of neutralising illegal criminal activity,” the Sofia prosecutor’s office said in a statement.
More than 300 police officers and prosecutors took part in the raid, as part of a multi-agency investigation into potential organised crime, money laundering, tax crimes, offences relating to unlicensed banking activity and computer fraud, said a spokesperson for chief prosecutor Siika Mileva.
The investigation comes four months after regulators in several US states issued “cease and desist” orders against the crypto lender for offering unregistered securities. The New York attorney-general’s office also sued Nexo for “falsely representing that it complies with applicable regulations and licensing requirements”.
By December, Nexo said it would begin phasing out its products and services in the US because the country refused to “provide a path forward for enabling blockchain businesses”. The company added at the time that it exited New York as part of a “co-operative approach with regulators”.
Bulgaria’s accusations also come in the wake of a tumultuous time for the crypto-lending industry. High-profile lending platforms such as Celsius and BlockFi collapsed into bankruptcy after prices of tokens such as bitcoin and luna crashed, leaving Nexo as one of the few remaining actors in the market. Sofia prosecutors said more than $94bn had passed through Nexo over the past five years.
Bulgarian authorities said the main organisers of the scheme being investigated were Bulgarian citizens and the suspected activity had been carried out mainly in Bulgarian territory.
“Evidence has been gathered that a person who used the platform and transferred cryptocurrencies has been officially declared a person who finances terrorist acts,” the prosecutor added.
Nexo said authorities were making anti-money laundering and tax-related inquiries about a Bulgarian entity of the group “that is not customer facing but only has back-office functions — payrolls, customer support and compliance.”
“There are authorities at one of Nexo’s offices in Bulgaria, which, as you know, is the most corrupt country in the EU”, it said. Nexo was “one of the most stringent entities with regards to know-your-customer and anti-money laundering,” it said.
A spokesperson for the platform added that Nexo was “co-operating fully” with Bulgarian authorities.