Nexo hit by Withdrawals After Bulgaria Raid Office to Investigate Alleged Money Laundering
The major crypto lender Nexo has been hit by a tsunami of customer withdrawals after the company’s office in Bulgaria was raided by police.
The raid at Nexo’s Sofia, Bulgaria office happened on Thursday at more than 15 sites across Sofia, Reuters reported. It added that more than 300 investigators, police and security officers were involved in the operation.
Nexo is being investigated for fraud, money laundering and tax evasion, multiple media outlets have reported. In a statement from the Bulgarian Prosecutor’s Office, Nexo’s business was referred to as “an illegal criminal activity.”
“In Sofia, active steps are being carried out as part of a pre-trial investigation aimed at neutralizing an illegal criminal activity of crypto lender Nexo,” Siyka Mileva, spokesperson for the Bulgarian Prosecutor’s Office, said during a press conference.
Customers rush to withdraw
Not surprisingly, the raid at multiple Nexo sites in Sofia has led to a rush of customer withdrawals from the crypto lending and borrowing platform.
The outflows were highlighted on Twitter by blockchain intelligence firm Arkham, which said it had registered “floods of outflows” from Nexo’s on-chain wallets after the raid.
Floods of outflows seen from @Nexo wallet addresses on-chain.
— Arkham (@ArkhamIntel) January 12, 2023
This follows news that Nexo Bulgarian offices were raided by special police this morning.
Stay safe.https://t.co/kU5L01rjQ1 pic.twitter.com/ylPDn9j91z
On-chain tracking firm Cielo also took to Twitter to share data that it said shows “large Nexo withdrawals and movements.”
Judging from the screenshot in the tweet, several large transactions worth hundreds of thousands of dollars each have been sent from Nexo-controlled wallets.
💸 Large Nexo withdrawals and movements right now.
— Cielo ↭ track 250 wallets (@CieloFinance) January 12, 2023
👀👀 https://t.co/Dy2UsASler pic.twitter.com/FY2dgrZ52m
Nexo: “Business as usual”
In a statement shared with Cryptonews.com, a Nexo spokesperson noted that the withdrawals were “business as usual” for the company.
“We have not experienced any abnormal activity in regards to withdrawals – it is business as usual,” the spokesperson said in emailed comments, adding that “withdrawals have amounted to less than $35 million according to leading blockchain analysts Nansen.”
“To add perspective, this is less than 2% of assets under Nexo’s management, which are over $2.3 billion as verified by leading account firm Armanino LLP,” the spokesperson added.
Nexo “never makes compromises” on compliance
The crypto lender itself also commented on the raid on Twitter, stressing that it has always done its best to stay fully compliant through its years in business.
“Over the years, we have turned down a lot of business because Nexo never makes compromises with regard to our very stringent anti-money laundering and know-your-customer policies,” Nexo said.
The company added in a follow-up tweet that it always cooperates with authorities. This has been done despite the fact that “some regulators have recently adopted the kick first, ask questions later approach,” it said.
We are always cooperating with the relevant authorities and regulators, and we are hopeful that we will have some exciting news in the weeks to come. 7/
— Nexo (@Nexo) January 12, 2023
Nexo phasing out US business
The raid at Nexo’s offices in Sofia comes after the company in December said it would phase out its business in the US after hitting regulatory roadblocks in the country.
“Our decision comes after more than 18 months of good-faith dialogue with US state and federal regulators which has come to a dead end,” Nexo stated on its website at the time.
Unchanged token price
The price of Nexo’s own NEXO token was more or less unchanged over the past 7 days, despite the bad news coming out of Bulgaria. At the time of writing, the token traded at $0.712, down 0.3% for the past 24 hours and up a mere 0.8% for the past 7 days.
Nexo is today headquartered in London, but the company was founded by Bulgarian entrepreneurs Antoni Trenchev, Kosta Kantchev and Kalin Metodiev.
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Updated on 27 January at 09:55 UTC with comments from Nexo.
