Crypto lender Nexo files $3 billion claim against Bulgaria

Crypto lender Nexo AG has taken a bold legal step against Bulgaria, filing an arbitration claim worth over $3 billion. This action follows the conclusion of a Bulgarian investigation into Nexo’s activities, which involved a raid on its office and the charging of four individuals.

Nexo submitted the claim to the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) in Washington, as stated in a company announcement on Wednesday. Represented by the US law firm Pillsbury Winthrop Shaw Pittman LLP, Nexo claims that the investigation was politically motivated, leading to lost business opportunities and harm to its brand reputation.

“We are looking forward to representing our clients in the next phase of this battle for justice,” said Deborah Ruff, Pillsbury’s head of arbitration. Matthew Oresman, Managing Partner of Pillsbury’s London Office, said: “Having examined the case in depth, we believe in the strength of Nexo’s claim.”

In January 2023, Bulgarian prosecutors charged four nationals with forming an organized crime group engaged in money laundering, unlicensed banking activities, and various other crimes. However, the inquiry against Nexo was dropped in December due to insufficient evidence of criminal behavior.

Established in 2018, Nexo provides a range of crypto services, including trading, custody, loans, and interest-earning products.

The recent legal filings reveal that Nexo seeks compensation for the thwarted plans of a US stock market listing and a soccer sponsorship deal due to the investigation. The company argues that the probe tarnished its reputation and destroyed shareholder value.

“Nexo had been working with three leading US investment banks on a funding round and an initial public offering on a major US stock exchange, with an indicative valuation between $8bn and $12bn. Nexo was days away from signing a multi-year strategic alliance with a major European football club, giving it exposure to its 330,000,000+ supporters across the globe,” the statement further reads.

The ICSID in Washington, responsible for handling disputes between investors and states, registered the case on January 18.

Bulgaria’s finance ministry acknowledged receiving the arbitration request, which will be reviewed by an inter-departmental committee to decide the next steps. The ministry stated that any communications related to this case should not be seen as an admission of the claims or acceptance of arbitral jurisdiction.

Nexo, co-founded by former Bulgarian lawmaker Antoni Trenchev, has consistently denied any wrongdoing. The case’s dismissal last month came with the prosecutors’ statement that they found no evidence of money laundering, tax crimes, computer fraud, or operating banking services without a license.

The investigation into Nexo’s activities, initially driven by allegations of involvement in an organized crime group operating in Bulgaria, the UK, Switzerland, and the Cayman Islands since 2018, has now been closed.