Bulgaria drops Nexo investigation, no evidence of fraud

Bulgarian authorities have dropped an investigation into Nexo.

Nexo was a non-MLM crypto Ponzi pitching passive returns of up to 10% annually.

Despite not being registered to offer securities in Bulgaria and thus operating illegally, in closing their investigation the Prosecutor’s Office claimed they found

no evidence of money laundering, tax crimes, computer fraud, and providing banking services without a licence.

A US regulatory investigation by the SEC found Nexo had laundered ~$9 billion through securities fraud. Nexo
settled the SEC’s charges
in January 2023 for $45 million.

As reported by Sofia Globe, unlike their US counterparts, Bulgarian authorities are unwilling to uphold the law.

The prosecutor’s office statement on December 22 said that Bulgaria had no regulatory framework regarding cryptocurrency assets and Nexo’s products were neither investment, nor financial instruments.

This is in stark contrast to the SEC’s position on Nexo;

“If you’re offering or selling products that constitute securities under well-established laws and legal precedent, then no matter what you call those products, you’re subject to those laws and we expect compliance,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.

Offering unregistered securities in Bulgaria is very much illegal. Securities in Bulgaria are regulated by the Securities Market Supervision, which Nexo isn’t and has never been registered with.

Bulgaria’s investigation into Nexo started in late 2022. Authorities at the time were investigating what they referred to as an “organized crime group”, suspected of “money laundering, tax offenses, banking without a license (and) computer fraud”.

This is in line with the SEC’s finding in the US.

In January 2023, the same month the SEC filed charges, Bulgarian authorities
raided
fifteen addresses in Bulgaria’s capital, Sofia.

Following the raids, Bulgarian authorities claimed

evidence has been collected that a person who used the platform and transferred cryptocurrencies has been officially declared a terrorist financing person.

Nexo was co-founded by Bulgarian nationals Antoni Trenchev and Kosta Kantchev.

BehindMLM’s interest in Nexo was piqued
following a report from Novanite, which tied Trenchev and Kantchev to OneCoin.

According to Novinite, prosecutors suspect that Bulgarians behind Nexo participated in a scheme orchestrated by Ruja Ignatova.

The suspicions are that the Bulgarians behind the large company acted according to the scheme of Ruja Ignatova and the OneCoin pyramid led by her.

Upon learning they were under investigation in the US, both Trenchev and Kantchev are reported to have
fled to Dubai
.

A visit to Nexo’s website today reveals the company is still pitching investors on annual returns of up to 16%.

Nexo remains unregistered to offer securities with the SEC or Bulgaria’s Securities Market Supervision.

As of November 2023, SimilarWeb tracked ~2 million monthly visits to Nexo’s website.

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🤖 Quick Answer

What investigation did Bulgarian authorities drop regarding Nexo?

How did US regulators differ in their assessment of Nexo?
The US Securities and Exchange Commission found Nexo had laundered approximately $9 billion through securities fraud. Nexo settled SEC charges in January 2023, paying $45 million in penalties, demonstrating regulatory action contrasting with Bulgarian authorities' approach.

What legal status did Nexo hold in Bulgaria?
Nexo operated illegally in Bulgaria as it was not registered to offer securities. Despite this unregistered status, Bulgarian prosecutors concluded their investigation without pursuing formal charges against the cryptocurrency platform.

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