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An international operation against a large-scale scheme for financial crimes, money laundering and violations of international sanctions against Russia is currently underway in Sofia, reported Bulgarian National Television. According to its sources, the company in question is NEXO.
It is suspected that the Bulgarians behind the big company acted according to the scheme of Ruzha Ignatova and the OneCoin ponzi scheme led by her. The Bulgarian, known as the “queen of cryptocurrencies”, is in the FBI’s top 10 most wanted persons. Europol and Interpol are also on her trail.
Prosecutors, investigators from the National Investigation Service and DANS officers, together with foreign agents, have begun searching the Bulgarian offices of the company that trades cryptocurrencies around the world.
The company operates from the Bulgarian capital Sofia and invites clients to deposit in Bitcoin and cryptocurrencies, with promises of high returns. The interest that investors would receive was many times higher than that of classic banking deposits. There are reports that the owners of the company, who are Bulgarians, have misappropriated part of the assets, amounting to several billion dollars.
The probe into the crypto company’s activities in the country was launched several months ago after foreign services detected suspicious transactions that were reportedly aimed at circumventing sanctions imposed by the European Union, the UK and the US on Russian banks, as well as on companies and citizens of the Russian Federation.
Nexo says it manages $12 billion in digital assets.
FBI has been investigating the Bulgarian cryptobank for a hole of more than $4 billion in its balance sheet, for illegal financial activity – lending in exchange for collateral, and for reports of misuse of its clients’ securities and commodities.
The DFPI announcement revealed that Nexo offered annual interest rates of up to 36% on deposited crypto assets to investors, which were significantly higher than rates for short-term investment-grade fixed income securities or bank savings accounts.
For the last 5 years, 3.6 million transactions totaling more than $94 billion have been made through Nexo platform, announced the spokesperson of the Bulgarian chief prosecutor Siika Mileva.
“Unfortunately, with the recent regulatory crackdown on crypto, some regulators have recently adopted the kick first, ask questions later approach. In corrupt countries, it is bordering with racketeering, but that too shall pass.” commented Nexo on Twitter.
NEXO’s troubles in the U.S.
The police operation against NEXO in the Bulgarian capital Sofia comes just a month after the company announced that it is leaving the U.S. market, where it encountered various regulatory hurdles.
NEXO’s U.S. troubles started in the fall of 2021, when the State of New York ordered the crypto bank to stop selling its ‘Exchange’ and ‘Earn’ products despite the fact that at the time NEXO was not offering the products in question in the State of New York itself. The move however, was seen as a warning against the company, which was also considered one of the leaders in the emerging crypto banking sector.
About a year latter in September 2022 the regulatory authorities of eight American states accused NEXO of breaching the local laws by offering an investment product without having the proper authorization to do so. The product in question – Earn – came with an interest rate, just like a stock, without actually being registered as such.
The U.S. regulatory authorities pointed out that NEXO should have been registered as a securities broker and dealer with the U.S. Securities and Exchange Commission before offering products bearing all the hallmarks of a security – yielding interest to clients for example.
At the time regulatory action against Nexo has been taken in the states of New York, California, Kentucky, Maryland, Oklahoma, South Carolina, Washington and Vermont. The financial authorities alleged that the company failed to provide its clients with the necessary information about the products in question, making it virtually impossible for them to make an informed investment decision. The Earn product offered an annual interest rate of 36% – far higher than similar products that have been offered currently on the market.
Two months latter, in the beginning of December last year, Nexo officially announced that it is leaving the U.S. market and will withdraw all of its products and services. The official reason cited by the company was “lack of regulatory clarity”.
Nexo U.S. troubles also explain the presence of U.S. federal agents in the raid against the company’s offices in the Bulgarian capital Sofia.
The company was launched back in 2018 by Kosta Kunchev, who earlier founded a profitable quick loans company called Credissimo, and Antony Trenchev, a former member of the Bulgarian Parliament. In the next few years the growth of NEXO had been exponential and the company quickly became a leader in the emerging crypto banking sector.
NEXO has a global presence with subsidiaries in the UK, Switzerland and the U.S. as well as several offshore territories like the Cayman Islands.
Currently there are several law suites against NEXO by investors around the world, the latest of which by three of their clients from Ireland, who are seeking some 59 million
USD as a reimbursement, because allegedly their NEXO accounts have been frozen and latter they have been forced to sell their assets for a price, which was significantly lower than the one currently on the market.