Criminal Proceedings Dropped Against Crypto Lender Nexo in Bulgaria
The prosecutor’s office in Sofia, the capital city of Bulgaria, has announced that it has discontinued criminal proceedings against crypto lender Nexo. The authorities stated that there was no evidence of any crimes committed and that crypto assets are not currently recognized as financial instruments and therefore not subject to regulation in the country.
Crypto Trading and Banking Activities without Authorization
Last year, the Sofia City Prosecutor’s Office initiated pre-trial proceedings against Nexo, investigating the company for suspected money laundering and sanctions violations. However, the prosecutor’s office has concluded that there is no evidence of criminal activity regarding banking activities without proper authorization or allegations of money laundering, tax crimes, or computer fraud. The defendants named in the case were accused of being part of an organized criminal group involved in profit-making activities between 2018 and January 2023. Two of the defendants, K. Kanchev and A. Trenchev, were also charged with conducting unauthorized banking transactions.
Lack of Regulatory Framework for Cryptocurrencies
The decision by the prosecutor’s office was also influenced by the regulatory status of cryptocurrencies in Bulgaria. The country currently does not have a specific legal framework for services related to crypto assets. As a result, the prosecutor’s office determined that the activities carried out by Nexo are not regulated, and there is no requirement for permits, registration, or licensing. The office clarified that since crypto assets are not considered financial instruments, their trading is not subject to regulation. Additionally, virtual currency is not considered legal tender in Bulgaria.
No Crimes Committed, Criminal Proceedings Terminated
Based on their findings, the supervising prosecutors concluded that no crimes had been committed and decided to terminate the criminal proceedings against Nexo. The prosecutor’s office clarified that the products offered by Nexo do not fall within the scope of investment services and that the activities of Nexo are not covered under the Law on Payment Services and Payment Systems in Bulgaria. Therefore, there was no basis for pursuing criminal charges against the company.
Hot Take: Bulgarian Prosecutor Drops Charges Against Nexo, Recognizes Lack of Regulation for Crypto Trading
In a significant development for the crypto industry, the prosecutor’s office in Sofia, Bulgaria, has dropped criminal proceedings against Nexo. The authorities concluded that there was no evidence of any crimes committed by the company and acknowledged the lack of regulatory framework for activities involving crypto assets in the country. This decision highlights the challenges faced by governments in establishing clear guidelines for the crypto industry, leading to a varied approach across different jurisdictions. As the industry continues to evolve, it becomes crucial for regulators to strike a balance between protecting consumers and fostering innovation in this rapidly growing sector.
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