Nexo sued its co-founder for $12 million in lost assets. The crypto platform says its former managing partner has left with a hardware wallet filled with the company’s crypto.
Crypto platform, former co-founderla legal battle!
Troubled crypto platform Nexo is battling a co-founder for $12 million in lost assets in a UK court, according to a court document. This document sheds light on previously unknown details of interactions between Nexo’s founders. Nexo and its co-founder Georgi Shulev are in dispute over the whereabouts of the Ledger hardware wallet, which contains some of the company’s crypto assets, according to a June 27 court ruling by the London High Court. Shulev is the son of Bulgaria’s former deputy prime minister, Lydia Shuleva. Georgi Shulev founded the company in 2019 with Antoni Trenchev, a member of the Bulgarian parliament, and other co-founders Kosta Kantchev and Kalin Metodiev. Shulev left the company, which provides crypto trading, lending and custody services, in 2019. The legal dispute has been going on since 2022.
According to the filing, previously the parties were fighting for control over a BitMEX account opened by Shulev in his own name but in the name of Nexo. Since Shulev was fired by Nexo in 2019 and lost access to his corporate email, both he and Nexo have been trying to take over the account.
BitMEX froze funds. But he ultimately released Nexo after a court order last August. However, Nexo said that its coin has lost about $7.9 million in value as prices have dropped significantly since September 2019, when the account was frozen. Now Nexo and Shulev are arguing about another part of the firm’s crypto treasure that ended up in Shulev’s hands or under the watchful eye of Bulgaria’s law enforcement, depending on which version of the story you believe. According to the document, the wallet had over $12 million in crypto currently missing.
The struggle of the founders
Shulev and Nexo have been at odds since September 2019, when Shulev was dismissed as managing partner of Nexo by the board of directors. According to reports, Shulev subsequently sought compensation for the Nexo shares that were not given to him. Access to Nexo’s cryptocurrency may have become a bargaining chip in these negotiations, according to the new court document.
In 2020, Shulev reportedly wrote to wealth management firm Zeus Capital that Nexo co-founder Kosta Kantchev had unfairly rejected Shulev’s promised Nexo shares. According to BestBrokers, Shulev also accused his former employer of abusing the trust of his users. Nexo denied Shulev’s accusations in a statement to online publication Invezz. While Nexo and Shulev were fighting over the BitMEX account, they came to an agreement that Shulev should return the assets belonging to Nexo in his custody and receive $1 million in return.
According to the latest court filing, on July 1, 2021, someone moved 45,232,012 Nexo’s own tokens (NEXO) from a wallet that Nexo claimed was controlled by Shulev to a new wallet. Also, Nexo, [email protected] Received an email with the seed phrase of the new wallet from
Shulev did not confirm that he was the sender of the tokens. However, he demanded the first of five installments of the $1 million payment promised to him. Meanwhile, the entire amount was scheduled to be paid within 30 months. According to the document, Nexo demanded that Shulev first return any other cryptos it owed him. That’s why he didn’t continue to pay. Shulev insisted on getting his money first. The parties have been in a stalemate since then.
lost notebook
The dispute is full of confusing and contradictory claims. Nexo told the court that Shulev retains access to a stash of 17.3 BTC, 27,000 USDT, 4.5 ETH and substantial amounts of BNB, XRP and XML. According to both sides of the lawsuit, the assets were stored in a lost Ledger hardware wallet. Neither Shulev nor Nexo admit to owning the device.
In July 2021, Nexo proposed that Shulev drop the $1 million settlement from the amount of crypto in its custody and return the rest. In response, Shulev offered to send “all remaining assets” to an escrow agent, who would also receive the $1 million compensation he owed from Nexo and then complete the swap. According to the court document, however, Shulev remained silent until March 2022, when Nexo asked for details on that deal.
During the hearings in April 2022, Shulev said he did not have access to these assets. Nexo pointed out that the NEXO tokens that the firm previously bought came from the same Ethereum Blockchain address, which includes some other tokens that need to be returned: ETH, USDT, USDC and BNB. Subsequently, Shulev denied that he was the sender of the tokens. Researchers have identified an address that fits the description of the wallet in question. There is still around $217,800 worth of BNB in the wallet.
According to Nexo, the company has set up a Ledger wallet for its funds, which Shulev controlled and took with him when he left Nexo in 2019. Shulev claims he left the device in Nexo’s office. He also claims he has no control over the funds. In his statement to the court this April, Shulev said he was questioned as a former employee by the Bulgarian National Investigative Service after the Nexo office was searched. He stated that Nexo volunteered to issue a PIN code to the investigators on March 21, 2023 for the Ledger wallet. It also said it transferred seven of the nine cryptocurrencies stored on the device to new wallets on March 31. Therefore, he stated that the cryptocurrency is now in the custody of the investigator. So, he said that Shulev couldn’t pass it on to Nexo.
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