Nexo ‘vehemently denies’ allegations of fraud following arrests in Bulgaria

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Crypto lender Nexo vehemently denies allegations brought against it by the Bulgarian prosecutor’s office following the arrest of four people on Friday in connection with an investigation into the company.

A spokesperson, speaking on behalf of Nexos management, told Decrypt that they could not confirm whether those arrested were employees of the company.

The Bulgarian public prosecutor’s office told a press conference that the Bulgarian nationals who were arrested are suspected of money laundering, tax crimes, computer fraud and unlicensed banking transactions, according to the Bulgarian English-language newspaper Novinite. .

Nexo, a London-based digital asset platform, lends funds to its clients and uses the proceeds to pay interest. It is one of the last remaining crypto lenders, as its two main competitors, Celsius and BlockFi, filed for bankruptcy last year.

At the time, Nexo said it only made oversecured loans. This means it tends to pay lower returns than BlockFi and Celsius used to offer. In June, its website said it posed virtually no risk to customers. This language has since been removed and replaced with a pledge never to lend without collateral. (Disclosure: Nexo is one of Decrypts 22 investors.)

The company has repeatedly said the investigation and a search of its offices yesterday were politically motivated.

We attended a very confused press conference of the Bulgarian prosecutor’s office which, as is publicly known, [has] a terrible reputation and conviction rate and has been regularly used by nefarious figures as a means of commercial plunder, a Nexo spokesperson said Friday morning. It is also abundantly clear that the prosecutors office has no understanding of blockchain technology or financial institutions and markets in general.

Yesterday the Bulgarian prosecutor’s office announced its widespread investigation into Nexo, which has an office in Sofia. Although it is still unclear how the investigation will unfold, users appeared to be in a rush to withdraw their funds from the Nexo platform following a raid on offices.

An archived version of Nexos Real-Time Attestation Tool shows that Nexo had 133,263 BTC in client liabilities, worth approximately $2.4 billion, as of Thursday morning. By Friday morning, that figure had fallen to 124,939 BTC, a change of around $68 million over the past day.

On-chain data tracker Cielo Finance shared a screenshot on Twitter showing hundreds of thousands of USD Coin (USDC), Binance USD (BUSD) and Ethereum leaving the platform in large trades .

I can confirm that all systems are operational and everything is processed in real time as always and volume is currently an order of magnitude lower than post-Celsius and post-FTX, Nexo spokesperson said about withdrawals.

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