A cryptocurrency firm under investigation for malpractice has been further incriminated by a leaked email in which one of its founders claims the company engaged in fraudulent activity for years.
The email from Nexo Co-Founder Georgi Shulev was viewed by BestBrokers, which ranks trading platforms to advise the public on the best to use. It claims that the email, originally written by the son of Bulgaria’s former vice premier in 2020 and sent to asset management company Zeus Capital, surfaced a few hours after police stormed Nexo on February 12 at its headquarters in Sofia.
Presented as outlining reasons for Shulev leaving the crypto firm and translated from the Bulgarian original, the email contains several damning accusations.
“I consider it appropriate and necessary to inform you about the way the company is operating today,” Shulev said. “Unlawful activities are carried out on a day-to-day basis, both in Bulgaria and in numerous other jurisdictions, and the assets of the company’s clients are being misused without their knowledge.”
Shulev further claims that Zeus Capital is in fact a front for Nexo, which he alleges encouraged investors to dump stock in Ethereum-based cryptocurrency Chainlink (LINK) so Nexo could benefit from buying it up at reduced prices.
After the raid in Sofia, four Bulgarian nationals were arrested and charged with being members of an organized criminal outfit that laundered money and engaged in computer fraud.
Referring to a power struggle that took place within Nexo between himself and fellow Co-Founder Kosta Kantchev, Shulev added: “The real problem is the involvement of employees in operations and responsibilities for actions that are illegal. Yet, no mention is ever made of most of these activities and the investigations of a number of regulators from multiple jurisdictions.”
He then goes on to accuse Kantchev and another Nexo Co-Founder, Antoni Trenchev, of creating a company “that writes, publishes, and distributes advertisements that contain analysis designed to degrade projects like Chainlink in order to make a profit from short positions.”
He added: “If there are still people who do not know or doubt that Nexo is behind Zeus Capital, I wish to point out that the email address to which Zeus sent me their degrading analysis about Chainlink was used solely to register with Nexo. This goes to prove that Nexo sends these reports on behalf of Zeus Capital using its own client database.”
Shulev claims that Trenchev even used Nexo’s ostensible partnership with Chainlink as a cover for his alleged plot to open up short-selling positions on the cryptocurrency, resulting in fraudulent profits for Nexo.
“Antoni proudly announced Nexo’s partnership with Chainlink, the hidden and main purpose of which is to attract additional resources to open short positions with LINK,” he said. “This example is enough to provide evidence for conflicts of interest, market manipulation, misuse of personal data, and abuse of client assets.”
Accusing the company he helped to create of coming up with “schemes for abuse, law violation, and siphoning off funds,” he added: “A great number of highly intelligent people [...] are unwittingly involved in numerous illegal activities in many jurisdictions around the world on a daily basis.”
Shulev added: “Although Kosta has referred to these people as rats on multiple occasions, they continue to contribute to Nexo’s development, and above all, the profits he amasses.”
Nexo is not the only cryptocurrency company to have had its reputation tarnished in recent times. Head of the collapsed exchange FTX Sam Bankman Fried was arrested in the Bahamas in December and faces multiple charges, including money laundering and wire fraud, which could see him spend the rest of his life behind bars in the US if convicted.
Nexo has denied any wrongdoing and claims it is the victim of a politically motivated smear campaign in the run-up to elections in Bulgaria. To read the full transcript of the letter, please click here.
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