Nexo alleges the company suffered reputational damage while its shareholders lost significant value due to the abandoned criminal investigation.
Cryptocurrency lending platform Nexo is looking to claim $3 billion in damages from the Bulgarian government following failed criminal investigations.
Nexo outlined the details of its $3 billion arbitration claim against the Republic of Bulgaria in direct correspondence with Cointelegraph on Jan. 24. It has submitted a claim through the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) based in Washington in the United States.
As previously reported, Bulgarian prosecutors dropped its case against Nexo in December 2023, concluding that there was no evidence of crimes commited by four Bulgarian nationals charged following a raid of Nexo’s offices at the beginning of the year.
Prosecutors initially alleged that Nexo executives participated in an organized criminal group from 2018 to 2023 aimed at profiting from crypto lending. Bulgarian nationals and Nexo co-founders Kosta Kanchev and Antoni Trenchev, Trayan Nikolov and Kalin Metodiev had been initially charged following the raids in January 2023.
The prosecution cited that Bulgaria lacked a legal regime covering crypto assets as part of the reason for dropping the charges.
Nexo filed legal documents through its Swiss subsidiary Nexo AG with the ICSID on Jan. 18. The institution handles legal disputes between international investors and nation-states.
Nexo claims that it had been working with three U.S. banks on an initial public offering on a major stock exchange which was carrying an initial valuation between $8 to $12 billion. The company also claims it was on the verge of signing a multi-year deal with a major, unnamed European football club, which would have given Nexo exposure to more than 330 million supports worldwide.
A statement from Trenchev said that despite the business being able to continue its operations, Nexo had suffered as a result of the dropped investigation.
“Our growth path has been slowed down and opportunities lost or significantly delayed. I personally promised 10 months ago that we would explore all legal means available to secure financial compensation for Nexo,” Trenchev said.
A separate report from Reuters also notes that the Bulgarian finance ministry had acknowledged receipt of a request for arbitration frim the ICSID, which is set for review.
Following the January raid, Nexo agreed to a $45-million settlement with the U.S. Securities and Exchange Commission and North American Securities Administrators Association for failing to register the offer and sale of its Earn Interest Product — a deal that settled cases brought by multiple U.S. state securities regulators. The platform shuttered the product in April.
The settlement with U.S. regulators followed a December announcement by Nexo in which the lending firm said it planned to wind down operations in the country. The company said there was “a lack of regulatory clarity” in the country, ultimately leading to its decision to exit the U.S.