The growth and popularity of DeFi has been a major driving force in the cryptocurrency industry. New financial tools like yield farming and liquidity pools are helping crypto natives stuff their bags. But there is a darkside to all of this. Bad actors have taken advantage of some of these crypto systems and now their house of cards is falling apart. Today we’re talking about DeFi platform Nexo, which was founded in 2017 to offer financial services like high-yield savings accounts for cryptocurrencies, crypto-backed loans, and even debit cards. But Nexo has fallen apart and the police are raiding their offices. How did it get to that point and is anyone going to get their money back from Nexo?
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0:00 Intro
0:54 Nexo Raid
2:56 Nexo’s Ties
3:34 Leaked Email
5:39 Fall of Nexo
8:56 The Problem
11:25 Conclusion
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The growth and popularity of deep eye Has become a major driving force in the Cryptocurrency industry new Financial Tools like yield farming and liquidity Pools are helping crypto natives stuff Their bags but there is a dark side to All of this Bad actors have taken Advantage of some of these crypto Systems and now their house of cards is Falling apart today we're talking about D5 platform nexo which was founded in 2017 to offer Financial Services like High-yield savings accounts or Cryptocurrencies crypto back-end loans And even debit cards but next we've Fallen apart and the police are raiding Their offices How do they get to this point and is Anyone going to get their money back From nexo let's get it Welcome to Big Boy crypto the people Channel home of the largest and greatest Crypto comedian all the interwebs make Sure to smash that like button hit that Subscribe button while you're at it on January 12th more than 300 police Officers investigators prosecutors and Foreign and National Security agents Rated nexo's headquarters in the Bulgarian capital of Sophia The operation targeted a large-scale Financial criminal scheme allegedly Involving money laundering and Violations of international sanctions
Against Russia According to police transactions Involved in organized criminal group Operating in several countries were Carried out that amounted to 94 billion Dollars in a period of five years Officers search 15 addresses related EXO With the help of foreign agencies but It's unclear which individuals are Wanted and what role they held in EXO Which had roughly 600 employees in Sofia In the end four people were charged of Money laundering tax crimes Computer Fraud and unlicensed banking Two of those individuals were released On bail of 1 million BGN the Bulgarian Currency and two were declared Internationally wanted persons Nexo quickly took to Twitter to assure The public that the company has been Compliant with global crypto regulations It is in four strict anti-money Laundering and know your customer Policies Unfortunately with the recent regulatory Crackdown on crypto some Regulators have Recently adopted the kick first asked Questions later approach Corrupt country that is bordering with Racketeering but that too shall pass but Necto claims it was an unlawful raid by Law enforcement authorities in Bulgaria One report suggested that inspectors Never identify themselves investigators
Did not provide a search warrant for Hours into the raid Crypto analytics firm Arkham Intelligence has reported to have seen Floods of outflows since the raids Nexo is seeking compensation for damages Caused by the abrupt police Interruption Which resulted in massive outflows Blockchain trackers yellow Finance Reported large withdrawals from nexo on The date of the raid highlighting Transactions of more than 200 000 usdc Leaving the platform Bulgarian media highlight indexos Alleged ties with the government of Bulgaria claiming the probe was Motivated by nexo's political donations Nexo was co-founded by former member of Parliament and Tony trenchev and Georgia Shulab the son of former deputy prime Minister Lydia shuleva Sika maleva Spokesperson for Bulgaria's Chief Prosecutors denied political reports There is real trouble with nexo and it's Not kyc AML or Bulgarian politics There's been something wrong for quite a While now and it's the same something Wrong that affected the likes of Voyager And nexo's problems go back just as far Thanks to my industry Connections in Crypto I received an email recently with Details about nexo that most people Don't know anything about got my hands On an email from 2020 that was written
By one of the firm's co-founders Georgie Shulev this email explains why shoe Lev Left nexo suddenly and unexpectedly in 2020 or into schuelev his co-founder Costa conchev robbed him of his nexo Shares she'll have claims he lost access To his Corporate email and has had his Nexo assets blocked without advanced Notice or explanation which would scare Anybody certainly a founder do you fail To reach an agreement after almost a Full year of unsuccessful negotiations According to shoe Levy and Costa Repeatedly argued over the way the Company was being managed we have had Multiple conversations especially about Legal violations and misuse of clients Funds This explosive email alleged the nexo Has been engaging in illegal activities For years she'll have claims email Quotes you'll have is saying 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 These claims undoubtedly led to the nexo Raid and I'm sure we'll be hearing more About which employees have been arrested And which have been implicated and to What extent the next news is all part of The recurring narrative in crypto right Now it's like a wild west shootout to
See which financial institutions are Going to be left standing when the dust Settles and regulation sets in it's About who's an honest cowboy and who's Sending ambushes in the Tall Grass Whatever you do and however you move in This space it's important to remember These Financial firms do not have your Best interest at heart it's all about Maximizing their profits in an Unregulated space while the getting is Good It's important to understand where your Yield actually comes from big mistake Most of us made over the last couple of Years How's your D by product actually get you Those incredible returns Do they really know what they're doing Are the bankers you're banking with Banking on luck last year nexo might Have appeared to have avoided much of The problematic lending the Doom players Like Celsius and Voyager digital on June 3rd 2022 about a month before Voyager Filed for bankruptcy The California Department of Financial Protection and Innovation or the dfpi Filed to desist and refrain order Against Voyager digital in June 2022 Nexo was gobbling up competition Nexo signed a term sheet evolved giving It 60 days of exclusive talks to Exploring all Equity acquisition of the
Company Nexo said it agreed to buy an Undisclosed stake in Hewlett Bancorp Last October it was reported that nexo Was in talks to invest in or acquire Several companies in Asia But data posted to the website of an Accounting firm contracted to provide Regular attestations on customer Balances reveal that nexo may have Suffered from significant withdrawals There's your nexo deposit declined at 3.9 billion down from 6.9 billion Reported the month before Statement to coin to ask an EXO Spokesperson said we are stable and able To provide clients with their funds at Any time Three months later nexo encountered its Own issues in the United States with the Same California Department of Financial Protection Innovation the father desists In refrain order against Voyager filing A decision refrain order against EXO Regarding its interest service that Offered up to 36 percent interest annually The FBI joined Regulators from United States including Kentucky New York Maryland Oklahoma South Carolina Washington Vermont and California Take action against nexo The FBI claimed in the filing the nexos Earned interest product was an
Unqualified security a security that has Not been cleared by the government for Sale in the form of an investment Contract in December 2022 an extra Decided to gradually cease operations in The U.S after villain divided dialogue With local regulators and so stated the Decision to leave the U.S is a Regrettable but necessary last month the SEC announced that it had settled Charges with nexo over allegations the Company had conducted unregistered Securities offerings in the form of Tokens that were issued to investors Nexo is fined 45 million dollars for Violating Federal Securities laws the SEC claim the nexo's token offerings Constituted Securities offerings and Therefore required registration with the SEC or an exemption from registration As part of the settlement EXO agreed to Pay a penalty and to register the tokens And securities with the SEC settlement Also requires nexo to offer rescission Rights to certain investors and it takes Steps to ensure compliance with SEC Regulators in the future There are a number of reasons why Companies like nexo Celsius and even Coinbase May base challenges operating In the United States we're serving U.S Customers The U.S has a complex regulatory Environment cryptocurrency and digital
Assets with different rules and Regulations at the federal and state Level this can make it difficult for Companies to navigate the legal and Compliance requirements consumer Protection is another area U.S Government has placed a high priority on Consumer protection the financial Services sector which can make it Difficult for companies to offer certain Types of products and services without Facing legal or regulatory challenges But the next one tells users are part of A growing Trend in the cryptocurrency Industry towards creating platforms to Provide traditional financial services For the digital asset space Financials of private companies like Voyager nexo and Celsius are not public Nobody knows your risk tolerance so they Can basically take out hundreds of Millions in loans with zero collateral Against it In the Divi ego system many products are Built on Smart contracts they're Intended to automatically execute Transactions based on certain conditions This automation relies on the assumption That the underlying assets being used as Collateral or being traded are properly Reserved and managed Alex If an entity offering a divide product Does not maintain proper reserves it can Create the risk of a shortfall in the
Event of a Sharp Market downturn or a Significant increase in demand for Withdrawals such a scenario The Entity May not be able to meet its obligations To its users leading to a loss of funds For investors It's important for investors to Carefully consider the risks associated With D5 products And it's early research the entities and Products in which they are considering Investing in this can include one Evaluating the underlying assets and Reserves two understanding the Regulatory environment and three Considering the track record or Reputation of the entity one argument For why divide products should not be Considered Securities by the SEC and Other government agencies is that they Can be decentralized and autonomous Advocates of this view argue that divide Products such as geofarming liquidity Pools should not be classified as Securities because they do not rely on Any Central Authority for their Operation and therefore do not meet the Traditional definition of a security Defy is designed to operate in a Decentralized and trustless manner Relying on mathematical algorithms it's More contracts to execute transactions And manage assets there are Decentralized DVI platforms that offer
Yield farming liquidity tools as Alternatives and excellent Celsius and Here are a few examples You have Ave a decentralized lending and Borrowing platform that allows users to Earn interest on their crypto assets you Have compound a decentralized finance Platform that enables users to earn Interest on their crypto assets and Participate in liquidity pools you have Lido Finance which is the biggest Ethereum liquid staking protocol around It's important to have trusted sources For education and news about Decentralized Finance misinformation and Accuracies can lead to poor decision Making that's why I'm here to help you Stay informed and up to date on the Latest developments and changes so make Sure you guys like And subscribe to the Channel that's all I got be blessed good Boy out Thank you
