Bulgarian Prosecutors Drop Charges Against Nexo Due to Lack of Evidence

The prosecutor’s office in Sofia, Bulgaria has decided to drop criminal charges against crypto lender Nexo due to a lack of evidence. After conducting thorough investigations, the supervising prosecutors concluded that there was no evidence of criminal activity involving Nexo, such as money laundering, tax crimes, or computer fraud. Additionally, the prosecutor’s office highlighted that crypto assets are not currently considered financial instruments in Bulgaria, and therefore, their trading is not subject to regulation. This decision was also influenced by the absence of a specific legal framework for services related to cryptocurrency in the country.

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Crypto Trading Not Subject to Regulation in Bulgaria

The prosecutor’s office for Sofia, the capital city of Bulgaria, has announced that criminal proceedings against crypto lender Nexo have been dropped. The authorities have stated that there is no evidence of criminal activity and that crypto assets are currently not considered to be financial instruments. As a result, trading in cryptocurrencies is not subject to regulation in the country.

Prosecutors Drop Criminal Proceedings Against Nexo

The Prosecutor’s Office of the Republic of Bulgaria has terminated the criminal proceedings against Nexo. These pre-trial proceedings were initiated on September 29th of last year, with law enforcement officials investigating the company for alleged money laundering and violations of sanctions.

According to the announcement from the prosecutor’s office, there is no evidence of criminal activity in relation to the carrying out of banking activities without the appropriate permit. Furthermore, no evidence of money laundering, tax crimes, or computer fraud was collected against the defendants. Therefore, the team of supervising prosecutors has concluded that there is no evidence of committed crimes.

The defendants listed in the case are K. Kanchev, A. Trenchev, K. Metodiev, and T. Nikolov. They are alleged to have been involved in an organized criminal group formed for profit between 2018 and January 2023. Kanchev and Trenchev also faced charges of conducting banking transactions without proper authorization. These transactions were related to lending and deposit activities in U.S. dollars, British pounds, and euros through the Nexo online platform.

The investigation involved various actions such as witness interviews, the analysis of payment account movements, complex forensic and evaluation reports, and searches and seizures. Although the supervising prosecutors had permission to spend $500,000 on an expert, they deemed it unnecessary.

No Evidence of Criminal Activity

The supervising prosecutors have concluded that there is no evidence of criminal activity in relation to Nexo. The carrying out of banking activities without the appropriate permit, the alleged crime which was being investigated, was not substantiated. Additionally, no evidence of money laundering, tax crimes, or computer fraud has been collected against the defendants.

The decision to drop the charges was based on a thorough examination of the factual situation and a lack of substantial evidence of committed crimes.

No Evidence of Money Laundering or Tax Crimes

The investigation conducted by the prosecutor’s office did not find any evidence of money laundering or tax crimes against Nexo or the defendants. This indicates that the allegations made against the company were not substantiated and that there was no illegal activity related to money laundering or tax evasion.

The thorough examination of payment account movements, along with the analysis of complex forensic and evaluation reports, revealed no indication of any money laundering activities. Similarly, no evidence of tax crimes or computer fraud was found during the course of the investigation.

Defendants and Charges

The defendants in the case, K. Kanchev, A. Trenchev, K. Metodiev, and T. Nikolov, were alleged to have been involved in an organized criminal group formed for profit between 2018 and January 2023. Kanchev and Trenchev faced additional charges of conducting banking transactions without proper authorization.

The transactions in question involved lending and deposit activities in U.S. dollars, British pounds, and euros through the Nexo online platform. However, the lack of substantiating evidence led the supervising prosecutors to conclude that no crimes had been committed by the defendants.

Investigation Process

The investigation conducted by the prosecutor’s office involved various actions and procedures. These included witness interviews, the analysis of payment account movements, complex forensic and evaluation reports, as well as searches and seizures.

Despite being granted permission to spend $500,000 on an expert, the supervising prosecutors deemed it unnecessary for the investigation. This suggests that the evidence collected through other means was sufficient to reach a conclusion.

The thoroughness of the investigation process demonstrates the diligence of the prosecutor’s office and their commitment to uncovering any potential criminal activity. However, without substantial evidence, the charges against Nexo and the defendants could not be substantiated.

Regulatory Status of Cryptocurrencies in Bulgaria

The regulatory status of cryptocurrencies in Bulgaria played a significant role in the decision to drop the charges against Nexo. The prosecutor’s office stated that Bulgaria currently lacks a specific legal framework for services involving crypto assets. As a result, activities conducted by Nexo are not regulated, and there is no requirement for permits, registration, or licensing.

The prosecutor’s office concluded that the products offered by Nexo are not considered financial instruments. Therefore, the provision of services to clients related to these products does not fall within the scope of investment services.

Crypto assets are not currently recognized as financial instruments in Bulgaria, and their trading is not subject to regulation. This lack of regulation further influenced the determination that no crime had been committed in relation to Nexo.

Products Offered by Nexo Not Financial Instruments

The prosecutor’s office clarified that the products offered by Nexo are not considered financial instruments. This means that the provision of services to clients in relation to these products does not fall under the scope of investment services.

By categorizing the products offered by Nexo as non-financial instruments, the prosecutor’s office indicates that these activities are not subject to specific regulations or requirements. This distinction reinforces the conclusion that no criminal activity was committed by Nexo in relation to their offerings.

Crypto Assets Trading Not Subject to Regulation

The lack of regulation surrounding crypto assets trading in Bulgaria influenced the decision to drop the charges against Nexo. The prosecutor’s office stated that since crypto assets are not currently recognized as financial instruments, their trading is not subject to regulation.

This lack of regulation indicates that there are no legal requirements or obligations for individuals or businesses engaging in crypto assets trading in Bulgaria. As a result, Nexo’s trading activities were not subject to scrutiny or oversight beyond the specific allegations made in this case.

Virtual Currency Not Recognized as Legal Means of Payment

Virtual currency is not recognized as a legal means of payment in Bulgaria. The prosecutor’s office made it clear that the activities involving virtual currency, such as those conducted by Nexo, are not classified under Article 4 of the Law on Payment Services and Payment Systems.

This non-recognition further emphasizes the lack of legal obligations or requirements for individuals and businesses operating with virtual currency in Bulgaria. It solidifies the conclusion that criminal charges were not warranted in the case against Nexo.

Conclusion

The decision by Bulgarian prosecutors to drop the criminal charges against Nexo reflects the lack of evidence of any criminal activity committed by the company. Throughout the investigation process, there was no substantiating evidence to support the allegations of money laundering, tax crimes, or computer fraud.

The regulatory status of cryptocurrencies in Bulgaria also played a significant role in this decision. With crypto assets currently not considered financial instruments and their trading not subject to regulation, there were no legal grounds to pursue the charges against Nexo.

This outcome highlights the need for clear regulatory frameworks and definitions surrounding cryptocurrencies and their related activities. As the crypto industry continues to evolve and gain prominence, it is crucial for governments and regulatory bodies to establish comprehensive guidelines to govern these markets effectively. Until then, cases such as the one against Nexo may continue to raise questions and uncertainties about the legal status and regulatory requirements of crypto trading.

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