Nexo Hit by Bank Run Following Office Raid Over Fraud Investigation
In the past 24 hours, funds have flowed out of Nexo following news that Bulgarian prosecutors are conducting money laundering investigations. Nexo is a crypto lender that loans out users’ money and uses the earnings to pay interest.
Antoni Trenchev, the Nexo co-founder, tweeted that government authorities raided Nexo’s Sofia offices in Bulgaria, intending to make tax-related inquiries. However, Trenchev added that the investigations only had to do with back-office functions and won’t affect the customers’ side in any way.
Despite the Nexo co-founder’s reassurance, several withdrawals from the crypto lender have occurred, as per blockchain analysts. For example, Arkham, a blockchain intelligence company, reports that users have withdrawn over $200,000 in the past 24 hours.
In addition, Cielo Finance, a firm that tracks on-chain data, took to Twitter to post evidence showing large transactions that show a collective $150,000 in stablecoins withdrawn. Meanwhile, Nexo says it did not notice any abnormality regarding withdrawals and that it was business as usual.
Other Crypto Lenders Affected by Withdrawals
Nexo is among the many crypto lenders that have recorded massive withdrawals in recent months. As a result, some have had to close shop. For example, last June, Celsius, a former crypto lender, collapsed suddenly after suspending withdrawals because of what the firm termed harsh market conditions.
Celsius then went bankrupt. Now its ex-CEO Alex Mashinsky is getting sued by New York’s Attorney General for defrauding investors. Moreover, another lending firm called BlockFi also had to pause withdrawals last November due to liquidity issues following the collapse of FTX.
Crypto Exchanges Record Massive Withdrawal Transactions
Elsewhere, exchanges have also seen a rush of withdrawals in the past few weeks. Just days ago, Huobi, a crypto exchange based in Singapore, saw crypto worth millions of dollars leave the platform. However, Justin Sun, Huobi’s majority shareholder, put liquidity back into the exchange.
Moreover, users of the leading crypto exchange, Binance, withdrew over $3.5 billion in just a week last December. In addition, the alleged mismanagement of users’ funds at FTX continues to shatter the confidence in centralized crypto exchanges.
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