Local and international law enforcement authorities reportedly raided the Bulgarian office of crypto lending firm Nexo on Thursday over issues involving financial crimes.
Bulgarian prosecutors and investigators are among the regulatory authorities conducting the probe into Nexo. Workers at the SANS Institute, a cybersecurity training firm, and other foreign agents have joined forces with local authorities to raid Nexo Bulgarian offices.
Nexo Under Probe
According to a local news outlet, the crypto lender facilitated a financial pyramid scheme by urging users to invest in bitcoin on its platform while promising them rewards that are higher when compared with those offered in the traditional banking system and brokerage houses. Authorities are likely referring to Nexo’s Earn Interest program.
The report also alleged that the top executives of the firm, some of whom are Bulgarians, have “appropriated part of the assets, ” which are currently worth billions of dollars.
Although the heated probe commenced in Sofia, the capital of Bulgaria, on Thursday, the authorities acknowledged that investigations had started months back. At the time, there were suspicions that Nexo was servicing clients from Russia, despite sanctions imposed by several regulatory authorities regarding offering financial services to Russians.
The latest action by the regulatory agencies shows that Nexo has violated the violations placed against Russia.
Nexo’s Action Likened to OneCoin Scam
The action by Nexo was likened to the infamous OneCoin, which was also based in Bulgaria until its downfall in 2017. OneCoin was used as a pyramid scheme to deceive global users and rob them of $4 billion worth of assets.
Since the crash of OneCoin in 2017, its co-founder, Ruja Ignatova (also called the Cryptoqueen), has since been hidden from the public. She is currently among the FBI’s Top Ten Most Wanted Fugitives.
Meanwhile, Karl Greenwood, OneCoin’s co-founder, has surrendered himself to U.S. authorities.
Nexo Claims to Foster Regulatory Compliance
As the matter unraveled, the crypto lending platform shared its stance on Twitter. The firm said it “never makes compromises with [its] anti-money laundering and know-your-customer policies.” The crypt lender added that it works closely with more than 30 anti-money laundering (AML) compliance officers, whose job is to foster regulatory compliance.
Regarding the Russia sanction violations, Nexo stated that it complied with the sanctions while supporting the Ukrainians in the war.
In its final words, Nexo mentioned that some regulators are taking action instead of asking questions first.
“With the recent regulatory crackdown on crypto, some regulators have recently adopted the kick first, ask questions later approach,” Nexo wrote.
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