Bulgaria's National Investigation Service and Sofia police raided CeFi lender Nexo's office then announced the investigation on Facebook. Bulgarian authorities are investigating Nexo on suspicion of tax evasion, computer fraud, money laundering, and operating an unlicensed bank.
As of writing, Nexo's native token, NEXO, has fallen just 5%, but the bank run has apparently started, with over $150M in BTC reported to have left the platform since the office takeover.
Nexo is one of the largest centralized crypto lenders, with ~$2.6B under management as of a month ago, although they recently claimed to have $12B. The company is based in Sofia, Bulgaria and is owned by Kosta Kunchev, who got rich in traditional high-risk loans, and Antony Trenchev, who used to be part of the Bulgarian Parliament.
So it’s easy to see how these guys could be targets of political attacks on their business. But it’s also easy to see how their actions might be deserving of an investigation.
National Investigation Service is claiming that Nexo is allowing a terrorist financier to launder money on the platform. Those are serious allegations, and the Bulgarians are throwing major labor at this: they claim there are more than 300 workers involved in investigating Nexo.
Nexo is claiming that Bulgaria is extremely corrupt and this is basically a shake-down. In response to Bulgaria's actions, Nexo tweeted, “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.”
In Nexo's defense, pretty much any bank with decent AUM is going to let a terrorist or two slip through the cracks. It seems like the terrorists always have a bank account somewhere, right? And also in Nexo's defense, Bulgaria does seem like it's doing some old school corrupt grandstanding. Is 300 Bulgarians a lot to throw at one finance crime investigation? It seems like a lot.
But Nexo is rumored to do some shady stuff. According to the US Feds, Nexo's balance sheet has a $4B hole, and last month Nexo officially left the US market. At the time, Nexo was being taken to court in New York, California, and 6 other states.