Bulgarian Prosecutors Drop Charges Against Crypto Lender Nexo — ‘No Evidence of Criminal Activity’

The prosecutor’s office for Sofia, the capital city of Bulgaria, has dropped criminal proceedings against crypto lender Nexo. “The team of supervising prosecutors came to the conclusion that there was no evidence of committed crimes,” the authorities stated, adding that crypto assets are currently not financial instruments and their trading is not subject to regulation in the country.

Crypto Trading Not Subject to Regulation in Bulgaria

The Prosecutor’s Office of the Republic of Bulgaria announced Friday that the Sofia City Prosecutor’s Office has terminated criminal proceedings against Nexo. Pre-trial proceedings against the crypto lender commenced on Sept. 29 last year, with law enforcement officials reportedly probing the company for alleged money laundering and sanctions violations.

“There is no evidence of criminal activity” regarding the carrying out of banking activity without a corresponding permit, the announcement details, as translated by Google. “Also, no evidence of money laundering was collected against the defendants, and no evidence of tax crimes or computer fraud was collected.” The prosecutor’s office stated:

On the basis of the established factual situation, the team of supervising prosecutors came to the conclusion that there was no evidence of committed crimes.

The case lists K. Kanchev, A. Trenchev, K. Metodiev, and T. Nikolov as defendants, alleging that they were involved in an organized criminal group formed for profit between 2018 and January 2023. Kanchev and Trenchev also faced charges of conducting banking transactions without proper authorization. The transactions involved lending and deposit activities in U.S. dollars, British pounds, and euros through the Nexo online platform.

The investigation included witness interviews, analyses of payment account movements, complex forensic and evaluation reports, and various investigative actions such as searches and seizures. Despite permission to spend $500,000 on an expert, supervising prosecutors considered it unnecessary.

The regulatory status of cryptocurrencies in Bulgaria also significantly influenced the prosecutors’ decision. Noting that Bulgaria lacks a specific legal framework for services involving crypto assets, the prosecutor’s office stated that activities conducted by Nexo are not regulated, and there is no requirement for permits, registration, or licensing.

“It can be concluded that the products offered by Nexo are not financial instruments. The provision of services to clients in relation to these products does not fall within the scope of investment services,” the prosecutor’s office detailed, elaborating:

Given that crypto assets are not currently financial instruments, their trading is also not subject to regulation.

Virtual currency is not recognized as a legal means of payment in Bulgaria, and its activities are not classified under Article 4 of the Law on Payment Services and Payment Systems, the prosecutor’s office clarified, noting: “The supervising prosecutors came to the conclusion that no crime had been committed and terminated the criminal proceedings.”

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