Crypto Lender Nexo Embattled as $158M Leaves the Platform

  • Nexo had customer liabilities of 133,263 BTC on Thursday before the holdings dipped to 124,939 BTC on Friday.
  • The crypto lender recorded withdrawals worth more than $158 million after Bulgarian watchdogs raided the company’s offices.
  • It remains unclear at the moment what the conclusion of the investigation will be.

The cryptocurrency lending sector has dealt a massive blow as one of the top lending platforms, Nexo, witnessed withdrawals worth more than 4158M over the past 24 hours. The massive withdrawals emerged after Bulgarian authorities raided the firm’s offices.

Such developments surprise most individuals as Nexo claimed 133,263 $BTC, worth about $2.5B, in client liabilities yesterday (Thursday). The following day (Friday) saw the holdings falling to 124,939 $BTC, worth around $2.37 billion.

The lending platform saw nearly 8,324 $BTC (worth about $158 million) withdrawn within 24 hours. That’s according to Armanino’s (Nexo’s auditor) real-time verification on the company’s website.

Nexo May Be Compromised

The Nexo raid by Bulgarian lawmakers is a step towards illegal activities that Nexo allegedly conducted. Nexo stated that Bulgaria is the most crooked nation in Europe. He added that they are conducting tax and AML-related queries about a Bulgarian group that isn’t client-facing but has back-office undertakings – compliance, customer support, and payroll.

Antoni Trenchev, Nexo’s co-founder, stated that the systems were up and operating, and everything worked in real time as usual. Meanwhile, is the firm encountering what triggered debacles in FTX and Celsius? FTX and Celsius recorded massive withdrawals that led to a fall of the former.

The cryptocurrency lending industry is closely monitoring Nexo’s situation. That’s because it raises worries about the security of customer finds in these ecosystems. Considering the crypto market’s high volatility, negative events or news might trigger investor panic and welcome colossal withdrawals.

Nexo’s Bulgarian authorities raid and the following withdrawal emphasize risks associated with the cryptocurrency lending market and the necessity of proper oversight and regulation.

Meanwhile, it remains unclear what the result of the investigation will be and its possible effects on Nexo and its clients. Yet, it acts as a warning signal to other crypto lending networks to ensure legit measures to safeguard client funds and adhere to regulatory requirements.

Cryptocurrency Lender Under Fire

Also, Nexo has been distressed in the US recently. Eight states – Vermont, Washington, South Carolina, Oklahoma, New York, Maryland, California, and Kentucky – resorted to cease and desist orders against the firm. This move by regulators means a massive hit to Nexo after it witnessed increased popularity over recent years.

Alongside the cease and desist orders, the lending firm has a lawsuit in NY. The state-filed lawsuit alleges that the firm didn’t register as commodities and securities dealers or brokers. Moreover, it indicates that the lending company lied about its registration status.

Nexo has encountered legal uncertainties in the US before. As a result, the firm has dealt with several regulatory actions, including penalties and fines. Nonetheless, these latest developments account for a substantial escalation of the regulatory challenges the firm is facing.

Nexo is yet to comment about the events, but they may take necessary steps to solve regulator concerns and allegations. It’s unclear how the legal fight will materialize, but it remains certain it will have a notable effect on the company’s future and the cryptocurrency lending market.