🔍 Nexo Under Scrutiny
Nexo paid $45 million to the SEC in 2023, faced a raid with 300 police officers in Sofia, and in 2025 returned to the US with Donald Trump Jr. on stage. In 2026 it continues serving European clients without a MiCA license. This is the story.
Timeline
What the Earn Interest Product Was and Why the SEC Considered It Illegal
From June 2020, Nexo Capital Inc. — a company registered in the Cayman Islands — offered American investors its Earn Interest Product (EIP). The mechanism was straightforward: the user deposited cryptocurrencies — Bitcoin, Ethereum, stablecoins like USDC or USDT, or the native NEXO tokens — and received periodic interest in return. The advertised rates were aggressive: up to 36% annual yield for holders of NEXO tokens, between 10% and 14% for stablecoins, and between 8% and 10% for Bitcoin and Ethereum. (Source: SEC Administrative Order Release 33-11149, January 19, 2023)
Nexo used the deposited funds to fuel its own institutional lending operations. The legal problem was specific: for the SEC, this scheme fell under the definition of a security according to the Howey Test. The test requires four elements: an investment of money, in a common enterprise, with an expectation of profit, derived from the efforts of others. The EIP satisfied all four. In February 2022, BlockFi had already paid $100 million for the same type of violation. Nexo stopped offering the EIP to new American customers on June 1, 2022, but kept it active for existing customers. That decision turned out to be the mistake that would lead to the settlement.
The sequence matters. Nexo was not simply a victim of a hostile regulatory environment. It chose to keep the EIP running for existing US customers after it already knew the product was under scrutiny, after BlockFi had already settled for nine figures, and after eight states had formally told it to stop. That is not a company caught off-guard. That is a company making a calculated bet that regulators would move slowly enough to allow maximum revenue extraction before the door closed.
2022: The Storm Builds
2022 was the worst year in the history of American crypto lending. Celsius froze withdrawals on June 13, 2022 and filed for bankruptcy in July. Voyager Digital followed. BlockFi collapsed in November. Nexo had never formally frozen withdrawals, but regulatory pressure was mounting. In September 2022, eight US states issued coordinated cease-and-desist orders: California, New York, Indiana, Kentucky, Maryland, Oklahoma, South Carolina, and Washington. In November, the CFPB joined the effort. On December 5, 2022, Nexo announced its exit from the US, citing a regulatory "dead end" — but negotiations with the SEC were already underway. (Source: CoinDesk, December 5, 2022)
January 12, 2023: The Sofia Operation
Six in the morning, January 12, 2023. More than 300 agents — regular police, gendarmerie, NIS and DANS intelligence services — searched fifteen addresses across Sofia. The operation had been prepared in secret since September 29, 2022. The charges: organized crime, money laundering, tax offenses, unlicensed banking activity, and computer fraud. The prosecution described Nexo as a "cryptobank." One detail stood out above all others: a client had been classified as a terrorism financier — and the company's AML/KYC mechanisms had not blocked his transactions. Arkham Intelligence documented hundreds of thousands of dollars in withdrawals in the first 24 hours after the raid. (Sources: Sofia Globe, LedgerInsights, Decrypt — January 12, 2023)
Four suspects were formally identified on January 16: Antoni Trenchev, Kosta Kanchev, Kalin Metodiev, and Trayan Nikolov — organized crime under Article 321 of the Bulgarian Penal Code, active from 2018 to 2023. The declared transaction volume: $94 billion over five years.
Three hundred agents across fifteen locations in a single morning is not a routine compliance inspection. Bulgarian prosecutors had been building this case for more than three months in complete secrecy. Whatever the legal outcome, the scope of the operation tells you something important about how seriously law enforcement viewed the situation.
January 19, 2023: The $45 Million SEC Settlement
View original SEC document →
Seven days after the raid: $22.5 million to the SEC plus $22.5 million to the NASAA coalition of 53 states, totaling $45 million. No admission of wrongdoing. Nexo committed to shutting down the EIP, notifying users by February 1, 2023, allowing withdrawals until April 1, 2023, segregating funds, and accepting an independent monitor. SEC Chair Gary Gensler stated: "Compliance with our longstanding laws is not optional." New York Attorney General Letitia James secured an additional $1.9 million and a five-year ban on Nexo operating in New York. (Sources: SEC Press Release 2023-11, NY AG Press Release, January 19, 2023)
One factual clarification worth stating directly: there is no separate CFTC enforcement action against Nexo. CFTC Release 8649-23 is the announcement of a Global Markets Advisory Committee meeting. It has nothing to do with Nexo. Some secondary sources have misread this document and the error has spread.
The Morton Case in London: £107 Million
Brothers Jason and Owen Morton and their cousin Shane Morton filed a claim at the High Court of London (CL-2022-000516) on October 17, 2022 for £107 million, approximately $126 million. They alleged that Nexo imposed a $150,000 per day withdrawal limit, then froze their accounts entirely and pressured them to resell NEXO tokens at a discount. Nexo described the lawsuit as "opportunistic." The case remains pending. (Source: CoinDesk, November 21, 2022)
December 2023: Bulgaria Drops Everything — but the Reason Matters
On December 22, 2023, the Sofia Prosecution Office closed the proceedings. Official justification: "It was not possible to establish money laundering, tax offenses, or computer fraud. Cryptocurrencies are not regulated, and Nexo's products do not constitute financial instruments." (Source: BTA, December 22, 2023) — Bulgaria did not say Nexo was innocent. It said it lacked the legal framework to prosecute it.
The distinction is not a technicality — it is the entire point. The same legal vacuum that allowed Nexo to operate at scale was precisely what protected it when prosecutors tried to hold it accountable. MiCA is in many ways the institutional response to exactly this kind of outcome.
$3 Billion Against Bulgaria: The ICSID Arbitration
In January 2024, Nexo filed a claim at the ICSID — the World Bank's arbitration center — seeking $3 billion in damages from the Bulgarian government. Among the items listed: the failure of a planned stock market listing in the United States. The case remains under consideration. (Source: Cryptonews, January 2024)
"America Is Back — and So Is Nexo": The Return with Trump Jr.
On April 28, 2025, Nexo hosted an exclusive US-facing event with Donald Trump Jr. as keynote speaker. Trenchev declared: "America is back — and so is Nexo." Trump Jr. told attendees: "Crypto is the future of finance. The key will be the regulatory framework." Gary Gensler had left the SEC, replaced by Paul Atkins, a known crypto advocate. New services: savings accounts, crypto-backed loans, spot trading, and a partnership with Bakkt (ICE/NYSE). Assets under management: $11 billion. Total lifetime transactions: $320 billion. (Source: Nexo.com, April 2025)
Early in 2026, the California Department of Financial Protection and Innovation fined Nexo $500,000 for making more than 5,000 loans to California residents without the required license. (Source: DFPI, 2026)
The MiCA Problem: Nexo Operates in Europe Without a CASP Authorization
From July 1, 2026, all crypto platforms operating in the EU must hold a CASP license. Binance: authorized, HCMC Greece. Coinbase: authorized, CSSF Luxembourg. Kraken: authorized, Central Bank of Ireland. Bybit: authorized, FMA Austria. Nexo: absent from the ESMA register. (Source: ESMA, April 2026)
| Exchange | MiCA License | Authority | EU User Risk |
|---|---|---|---|
| Binance | ✅ Authorized | HCMC Greece | 🟢 None |
| Coinbase | ✅ Authorized | CSSF Luxembourg | 🟢 None |
| Kraken | ✅ Authorized | CBI Ireland | 🟢 None |
| Bybit EU | ✅ Authorized | FMA Austria | 🟢 None |
| Nexo | ❌ Not authorized | — | 🔴 High |
For EU users: no MiCA-standard fund segregation, no European supervisory authority with jurisdiction, and real operational risk once the July 1 deadline passes. Fewer than 65 days remain.
Warning: "Fioro Nexo" Is a Separate Fraudulent Entity
In search results, the name "Fioro Nexo" appears — an unauthorized investment scheme that imitates the Nexo name without any connection to Nexo Capital Inc. (nexo.com). If you receive communications from "Fioro Nexo," report them to ESMA or your national competent authority. This investigation concerns exclusively Nexo Capital Inc.
What Remains, Three Years Later
In January 2023, within seven days, Nexo absorbed a 300-agent raid in Sofia and signed a $45 million settlement agreement. It then watched every Bulgarian charge dropped, sued the government for three billion dollars, and returned to the United States in 2025 with the President's son on stage.
Crypto markets reward survivors. Nexo has demonstrated an ability to survive that very few companies in this sector have matched. For anyone evaluating the platform in 2026 from Europe: with fewer than 65 days until the MiCA deadline, Nexo has not obtained CASP authorization. And a $3 billion arbitration claim against a European Union member state remains open. The conclusions are yours to draw.
To compare MiCA licenses across all major exchanges, see our updated MiCA Compliance Tracker →
Sources: SEC Release 33-11149 (January 19, 2023); SEC Press Release 2023-11; NY AG (January 19, 2023); CoinDesk (December 5, 2022; November 21, 2022); Decrypt (January 12, 2023); Sofia Globe (January 12, 2023); LedgerInsights (January 12, 2023); BTA (December 22, 2023); Blockchain News Group (December 23, 2023); Nexo.com blog (April 28, 2025); Cryptonews (January 2024); ESMA (April 2026); DFPI California (2026).