Nexo Offices Raided in Money Laundering Investigation, Reports Crypto Lender Hit By Surging Withdrawals

Nexo, a digital asset lending company, has witnessed an influx of withdrawals. The high withdrawal volumes on the platform come amid reports that Bulgarian prosecutors are investigating the company over allegations of fraud.

Nexo hit by high withdrawals amid fraud investigations

Reports circulating in the crypto space claim that Bulgarian authorities raided the offices of Nexo in Sofia as part of a financial investigation. The company has confirmed these reports saying that it was working with the relevant regulatory bodies and regulators.

The co-founder of Nexo, Antoni Trenchev, noted that authorities were in one of the company’s offices in Bulgaria, adding that it was “the most corrupt country in the EU. Trenchev said that the authorities were investigating the company’s anti-money laundering (AML) and tax compliance.

Trenchev further added that the office raided by authorities did not provide any crypto products to Nexo clients. Instead, the office dealt with back-office functions such as customer support, payroll, and compliance.

News of the raid have spooked the crypto market, as funds are now being taken out of the platform. However, the lending company has said that the withdrawal volumes are normal, adding that the firm was “all business as usual.”

The lender has done little to reinstate confidence, as Cielo Finance posted a tweet showing large withdrawal transactions from the platform. More than $100,000 worth of stablecoins was being withdrawn from the platform. The Nexo treasury wallet also recorded some activity after moving around BNB, WETH, and stablecoins on the BNB Chain and Polygon.

It is not the first time that Nexo has been at loggerheads with regulators. In December, Nexo said it would phase out its operations in the United States after failing to reach a consensus with regulators.

Concerns over crypto lending firms

Crypto lending platforms have been significantly hit by the bear market that persisted for most of 2021. Celsius was the first crypto lender to fall, with the platform halting withdrawals in June because of “extreme market conditions.” The company later filed for bankruptcy. The founder of Celsius, Alex Mashinsky, is being used by the New York attorney general for defrauding investors.

BlockFi is another lending company whose operations have also been affected. The lender halted withdrawals in November before closing its doors shortly after. The decentralized finance (DeFi) space is not the only one affected by the ongoing bear market. Centralized exchanges have also witnessed an influx in withdrawals as confidence dropped because of FTX;’s bankruptcy.

Genesis crypto lending unit is under scrutiny after it halted withdrawals citing exposure to FTX. The company has said that bankruptcy could be an option. The lending unit allegedly owes Gemini Earn users around $900 million.

The action of halting withdrawals at Genesis has attracted the attention of the US Securities and Exchange Commission (SEC), which has now filed a lawsuit against Gemini and Genesis for offering an unregistered security.


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