Nexo Files For $3 Billion Damage Claim: Bulgaria Faces Consequences

Cryptocurrency lending company Nexo is seeking $3 billion in damages from the Republic of Bulgaria. The move follows the government’s decision to drop a criminal investigation against the firm and its executives last month.

Nexo has filed for arbitration through the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), outlining its case in recent correspondence with the media. The claim centers on alleged lost growth opportunities and reputational harm stemming from the now-abandoned probe.

What happened between Bulgaria and Nexo?

In January 2023, Bulgarian authorities raided Nexo’s offices in the country, charging four Nexo executives with participating in an alleged criminal organization profiting from crypto lending activities from 2018 to 2023.

Also read: Over 70% Of Crypto Communications Contain Potential Violations: FINRA

However, in December, prosecutors dropped all charges, citing a lack of evidence and the country’s missing legal framework for crypto regulation. Nexo was still forced to halt plans for major expansion, according to company co-founder Antoni Trenchev.

Key Points:

• Nexo is seeking $3 billion in damages from Bulgaria.
• It comes after prosecutors dropped charges against executives.
• Files claim through the World Bank arbitration court.
• Nexo cites lost IPOs and sponsorship opportunities.

Nexo claims hindrance in growth and opportunities

In its claim filed on January 18th, Nexo states that prior to the raids, it had been planning a multi-billion-dollar stock market listing and sponsorship deal with a top European football club.

The crypto lender says a pending IPO with three U.S. banks likely valued the company between $8 and $12 billion. It also referenced a soon-to-be-signed, multi-year sponsorship agreement with an unnamed major football team to advertise Nexo to over 300 million fans globally.

Read more: JPMorgan Downgrades Coinbase Stock To ‘Underweight’ Amidst Falling Prices

“Our growth path has been slowed down and opportunities lost or significantly delayed,” said Trenchev, vowing to “secure financial compensation for Nexo” using all legal means. While Nexo continues to operate, Trenchev contends that the aborted criminal case substantially impacted business prospects and momentum.

For its part, Bulgaria’s finance ministry acknowledged receiving Nexo’s request for arbitration, which is now under review. The claim comes as Nexo faces increased scrutiny in the U.S. and EU. Last April, it settled for $45 million over an unlicensed lending product, shutting it down completely.

With global policymakers racing to introduce consumer protections for crypto, false starts and overreach during investigations present reputational risks for governments and companies alike.