Bulgarian authorities drop Money Laundering investigation into Nexo executives

The Sofia City Prosecutor’s Office has determined the legality of the actions of the four people involved in the Nexo online platform and has decided not to pursue their major charges.

The Sofia City Prosecutor’s Office closed a major investigation into the activities of four individuals linked to the Nexo online platform.

The investigation, launched on September 29, 2022, focuses on allegations of involvement in organized crime groups and unauthorized banking operations on the Nexo platform. Under article 321 of the Penal Code, the four individuals are charged with organizing the activities of a criminal group between 2018 and January 2023.

In addition, two of the individuals are also facing charges for conducting unauthorized banking transactions between June 2018 and January 2023 involving loan and deposit raising in various currencies on the Nexo Platform without proper authorization under the Credit Institutions Act.

The investigation encompasses a large number of procedural and investigative actions, including witness interrogation of secret identity holders, technical and banking expertise, and payment account liquidity analysis. International cooperation has also been demonstrated, with the European Inquiry Order and its subsequent response playing an important role.

Technical Defense

Despite exhaustive investigations and international scrutiny, including administrative actions against Nexo in various U.S. states, the supervising prosecutor concluded that the evidence did not support the allegations. No evidence of criminal organization, unauthorized banking, Money Laundering, tax offences or computer fraud was found against the defendants.

A key aspect of the findings is the legal status of Vitual Money in Bulgaria and the European Union. According to the report of the European Banking Authority and the current legal framework, cryptoassets are not recognized as a legal means of payment or a regulated financial instrument, and there are no regulations in Bulgaria and the European Union. This lack of regulation is a key factor in determining whether Nexo’s activities constitute a financial crime, and Nexo’s activities are mainly carried out online and may be managed outside of Bulgaria.

Nexo’s settlement with various U.S. regulators further confirms that there is no fraud or misleading conduct in Nexo’s operations. This comprehensive analysis led to the termination of the criminal proceedings, with the Supervisory Prosecutor concluding that there were no criminal acts under the current legal regime for cryptoassets and financial services.