Nexo, which emerged unscathed from crypto contagion that forced competitors into bankruptcies, defended its record and called Bulgaria "corrupt."
Listen to the CoinMarketRecap podcast on Apple Podcasts, Spotify and Google Podcasts
Nexo's offices have been raided by Bulgarian authorities — amid accusations of tax and money laundering violations, the establishment of an organized crime group, and unlicensed banking.
Prosecutors also said the crypto lender had been used to transfer digital assets by someone who had financed terror, although no details were given.
In a statement, Bulgarian prosecutors said that operations aimed at "neutralizing illegal criminal activities" were being carried out in the country's capital Sofia.
Reuters said that included some 300 law enforcement personnel raiding 15 offices throughout the city.
In a Twitter thread, Nexo denied any wrongdoing — without mentioning Bulgaria — and said it:
"Over the years, we have turned down a lot of business because Nexo never makes compromises with regard to our very stringent anti-money laundering and Know Your Customer policies … Since day one, we have gone the extra mile to implement cutting-edge solutions to ensure adherence to the highest regulatory standards and simultaneously provide a smooth customer onboarding journey."
Later in the thread it said:
"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 on racketeering, but that too shall pass."
While that didn't mention Bulgaria directly, several comments made to press outlets called it "the most corrupt country in the EU."
What effect the move will have remains to be seen. Its NEXO token was down more than 5%.
On Twitter, crypto intelligence firm Arkham said it was seeing "floods of outflows" and on-chain data tracker Cielo Finance also said it was seeing "large outflows." Both posted screenshots of transactions in the millions of dollars.
U.S. Troubles
Nexo was one of the few crypto lenders which emerged relatively unscathed from the round of 2022 bankruptcies caused by risky investment decisions (notably Celsius) the collapse of crypto hedge fund Three Arrows Capital (like Voyager Digital) and most recently the failure of the FTX exchange (like BlockFi.)
Nexo has also had trouble in the U.S. — announcing in December it had ended business in eight states and had plans to withdraw from the U.S. market, citing "more than 18 months of good-faith dialogue with U.S. state and federal regulators which has come to a dead end."
Given the lawsuit filed by the Securities and Exchange Commission charging crypto exchange Gemini and lender Genesis of violating securities law with the Gemini Earn program, it seems likely that Nexo may experience further legal troubles in the U.S. The SEC was clear that more enforcement actions were coming, even soliciting whistleblowers.
At the same time, Nexo announced new regulatory approvals in Poland and Italy late last year.
