- Nexo says the investigations damaged its reputation and hindered its growth.
- Bulgarian authorities closed the Nexo case in December 2023, citing a lack of evidence.
In one of today’s major cryptocurrency stories, Nexo, a prominent crypto lender, is reportedly seeking $3 billion in damages from Bulgaria.
According to Reuters, Nexo AG, the Swiss arm of Nexo Capital, claims that last year’s aborted criminal investigation severely disrupted the company’s expansion plans, including a potential listing in the United States.
Nexo files arbitration request with ICSID
Nexo submitted a request for arbitration to the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), arguing that Bulgaria’s investigation tarnished its reputation and destroyed shareholder value.
As reported in December 2023, the Bulgarian prosecutor’s office announced it had terminated criminal investigations into Nexo and four of its executives, citing insufficient evidence.
The prosecutor’s decision came after nearly a year of inquiries that included a January 2023 police raid on Nexo’s offices in Sofia. Authorities had alleged money laundering, computer fraud and unauthorized banking activities against the lender and its senior executives.
Despite the closure of the case, Nexo maintains the raids and allegations caused lasting damage. The company filed for arbitration with ICSID on January 18. Bulgaria’s finance ministry has confirmed it received an arbitration request routed through ICSID.
Bulgarian officials say an interdepartmental committee will review the request and recommend next steps, while noting that this acknowledgment does not amount to an admission on the substance of the claims or an acceptance of any arbitral jurisdiction.
ICSID, headquartered in Washington, D.C., is an international arbitration body that resolves disputes between states and foreign investors. Past cases have resulted in substantial awards against countries such as Pakistan, Ecuador and Venezuela, illustrating the forum’s role in investor-state dispute resolution.