Crypto Lender Nexo Sues Cayman Island's Regulator for Denied VASP Registration while under investigation in Bulgaria

Nexo has sued the Cayman Islands Monetary Authority to overturn its rejection of Nexo's application to register as a virtual asset services provider.

At the same time, it is reported [sources below] Nexo is involved in a Bulgaria Probe Into Alleged Money Laundering, Tax Violations. Further, authorities say they have evidence a Nexo user is a terrorist financier.

Read more here:-

Crypto lender Nexo has sued the Cayman Islands Monetary Authority to get the regulator to reverse its rejection of Nexo's application to register as a virtual asset services provider (VASP), according to a court document filed last week.

The regulator initially refused the company's Dec. 20 application, citing "insufficient documentation on customer risk assessment and enterprise risk assessment" plus deficiencies in anti-money laundering procedures as several of the reasons.

However, Nexo argued in the court document that the grounds of the application were that the reasons were not "satisfactory" nor "sufficiently detailed."

"[The lawsuit] is a natural reflection of Nexo's ongoing license acquisition mission around the world and something quite normal that occasionally happens throughout the process of getting authorized," a spokesperson from Nexo told CoinDesk in a statement.

Nexo has been scrutinized by regulators lately. Authorities are investigating it in Bulgaria for suspicion of money laundering and tax offences, among other things, which it has denied.

Crypto Lender Nexo Targeted in Bulgaria Probe Into Alleged Money Laundering, Tax Violations

Authorities say they have evidence a Nexo user has been officially declared a terrorist financier.

Crypto lender Nexo is being investigated by authorities in Bulgaria on suspicion of money laundering, tax offences, banking without a license and computer fraud.

The Bulgarian Prosecutor's Office is investigating Sofia to

• "Neutralize the criminal activity" of Nexo, according to an automated translation of a statement on Facebook Thursday.

More than 300 people are involved in the operation.

"The main organizers of the scheme are Bulgarian citizens, and the activity was carried out mainly from the territory of Bulgaria," Attorney General Siika Mileva said in the statement. "Evidence has been collected that a person who used the platform and transferred cryptocurrencies has been officially declared a terrorist financing person," according to the statement.

In a thread on Twitter, Nexo said

• It is cooperating with relevant authorities and regulators. It said it had stringent anti-money-laundering (AML) and know-your-customer (KYC) policies and implied it was being targeted unfairly.
• "There are authorities at one of Nexo's offices in Bulgaria, which is, as you know, the most corrupt country in the EU (European Union),"

a Nexo spokesperson said in an email to CoinDesk.

• "They are making AML and tax-related inquiries about a Bulgarian entity of the group that is not customer-facing but only has back-office functions – payroll, customer support, compliance.
• We are one of the most stringent entities regarding KYC/AML."

Following news of the investigation,

• More than $3 million left the company's platform.
• The lender's native coin sank around 7% to as low as 70 cents.
• At the time of writing, it was priced at just under 73 cents.

SOURCE

• https://www.coindesk.com/policy/2023/01/17/crypto-lender-nexo-sues-cayman-islands-regulator-for-vasp-registration/
• https://www.coindesk.com/business/2023/01/12/nexo-subject-to-investigation-in-bulgaria-over-alleged-money-laundering-tax-offenses/