Cryptocurrency lender Nexo is pursuing $3 billion in damages from Bulgaria in connection with a halted criminal investigation that the company claims disrupted its plans for a U.S. stock market listing and a soccer sponsorship deal, according to legal filings seen by Reuters.
Nexo AG, a Swiss subsidiary of Cayman Islands-based Nexo Capital, contends that the investigation led to reputational damage and a decline in shareholder value. The company filed its claims with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), with the case officially registered on Jan. 18.
Bulgaria’s finance ministry acknowledged receipt of the ICSID’s arbitration request, indicating that a specialized inter-departmental committee would review the case and propose the next course of action. The ministry emphasized that such communications should not be considered an admission of the claims or acceptance of arbitral jurisdiction.
The prosecutor’s office, also a respondent in the case, has not responded to requests for comment.
In January 2023, Bulgarian prosecutors launched an investigation into Nexo AG, accusing its founders, including former Bulgarian lawmaker Antoni Trenchev, of participating in an organized crime group to launder money and commit tax and computer fraud. However, the case was dropped last month due to a lack of evidence, with prosecutors citing the absence of a legal framework for crypto asset services in Bulgaria.
Nexo, denying any wrongdoing, asserts that the investigation was politically motivated, a claim previously refuted by prosecutors. This legal dispute marks an uncommon instance of a crypto firm seeking compensation from a country for a dropped investigation. Nexo’s co-founder Trenchev, in an earlier Reuters interview, declined to disclose the banks involved in any potential listing or the European soccer club with which sponsorship talks were terminated.
The International Centre for Settlement of Investment Disputes (ICSID), known for handling disputes between international investors and states, has previously ordered various countries, such as Pakistan, Ecuador, and Venezuela, to pay substantial damages to companies.
Despite the alleged damages claimed by Nexo, Reuters was unable to independently verify the amount. In 2018, Nexo, acting as a crypto lender, phased out its U.S. products and services and agreed to a $45 million settlement with the U.S. Securities and Exchange Commission and state regulators for failing to register its crypto asset lending product.
