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Crypto lender Nexo AG and its subsidiaries are suing the Republic of Bulgaria for $3 billion. The claim is for damages and “lost opportunities” caused by Bulgaria’s wrongful investigations into the company and its executives.
Nexo AG and its subsidiaries have filed a lawsuit against Bulgaria for over $3 billion for damages caused by the company’s “wrongful and politically motivated actions against the company and its executives.”
Damages and Lost Opportunities
According to a media release from Nexo, Nexo AG, a Swiss unit of Cayman Islands-based Nexo Capital, filed an ICSID arbitration claim for over $3 billion against the country for “damages and lost opportunities caused by the country’s wrongful and politically motivated actions against the company and its executives, involving unjustified and oppressive criminal investigations, subsequently dismissed for lack of merit.”
According to documents filed with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), Reuters reports that Nexo AG alleges Bulgaria’s investigation damaged its reputation and destroyed its shareholder value.
Bulgarian authorities launched an investigation into Nexo over allegations of money laundering, computer fraud, and tax offences. Authorities raided over 15 sites in Bulgaria’s capital, Sofia, involving over 300 personnel.
However, the Bulgarian Prosecutor’s Office ended its investigation into the lender, stating it did not find evidence of wrongdoing. On December 21, 2023, Nexo companies and their management were cleared of wrongdoing, and criminal proceedings against Kosta Kantchev, Antoni Trenchen, Kalin Metodiev, and Trayan Nikolov were terminated.
Nexo’s media statement said the “unjustified and oppressive criminal investigation” was subsequently dismissed for lack of merit.
Nexo’s Brand Damaged and Nexo AG Investments in Bulgaria Harmed
Deborah Ruff, head of arbitration at Pillsbury Winthrop Shaw Pittman LLP, the law firm representing Nexo, said:
“We are looking forward to representing our clients in the next phase of this battle for justice.”
Matthew Oresman, Managing Partner of Pillsbury’s London office, commented:
“Having examined the case in depth, we believe in the strength of Nexo’s claim.”
The investigation had a significant impact on Nexo’s brand and reputation, resulting in lost lucrative business opportunities, damage to Nexo AG’s investment in Bulgaria, and impact on many of Nexo’s planned business activities.
The following were impacted and abandoned:
- “Nexo had been working with three leading US investment banks on a funding round and an initial public offering on a major US stock exchange, with an indicative valuation between $8bn and $12bn.”
- “Nexo was days away from signing a multi-year strategic alliance with a major European football club, giving it exposure to its 330,000,000+ supporters across the globe. This partnership would have made Nexo the club’s official digital wallet and main partner. The roll-out of an innovative club-branded payment card was in the works – a game changer for both Nexo and the blockchain industry, as it would have offered an instant first-time gateway for millions of users to the rapidly expanding digital asset class.”
- “Nexo’s reputation and brand have been tarnished, resulting in a plethora of missed opportunities and lost revenue, and destruction of company value.”
Antoni Trenchev, co-founder of Nexo, commented:
“Despite the unjustified attacks by the Bulgarian authorities in January 2023 taking a significant toll on the entire Nexo group, we were able to continue business operations. However, our growth path has been slowed down, and opportunities lost or significantly delayed.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.