Bulgarian prosecutors have launched an investigation into alleged illegal activities conducted by cryptocurrency lender Nexo, they said on Thursday, raiding more than 15 sites in the capital Sofia.
The announcement comes after Nexo said in December it would phase out its U.S. products and services over the coming months due to clashes with regulators.
“In Sofia, active steps are being carried out as part of a pre-trial investigation aimed at neutralising an illegal criminal activity of crypto lender Nexo,” Siyka Mileva, a spokeswoman for the prosecutors’ office, told reporters.
“It has been established that the main organisers of the international platform are Bulgarian citizens and the main activities are from Bulgarian territory,” she said.
Mileva said over 300 investigators, police officers and security officers were involved in the operation. They are investigating the setting up of an organised crime group, tax crimes, money laundering, banking activity without a licence and computer fraud.
Prosecutors said Nexo has been operating through many companies, many of which were just “post boxes”.
A Nexo public relations official told Reuters by email that Bulgarian authorities were at one of its offices, but said the entity “only has operational expense-related functions – payroll, customer support, back office”.
Crypto lenders act like banks for the crypto world, offering customers interest on cryptocurrencies they deposit with the platform.
According to Bulgarian prosecutors $94 billion has gone through the Nexo platform in the past five years.
They said they have also established that a person officially found to have financed terrorist activities had used the platform to transfer cryptocurrencies, without elaborating.
Lawmakers around the world have stepped up calls for regulation of crypto firms following the collapse of major exchange FTX last year.
The firms grew rapidly during the COVID-19 pandemic, but as crypto markets slumped last year various crypto lenders froze withdrawals, leaving customers with large losses. Major U.S.-based lenders Celsius, Voyager Digital Ltd and BlockFi all filed for bankruptcy last year.