Even if Nexo seems to be holding up in the midst of a storm of bankruptcies and hacks, the crypto exchange is still dragging a few pans. Former co-founder Georgi Shulev was fired in 2019, he confused his private keys a bit wallets bitcoins (BTC) with those of the company. Apparently in 2019, the KYC was really very loose and the court had to decide who was the owner of the funds.
September 2019: Georgi Shulev is fired
The editorial staff of Tremplin.io had unraveled the friendly and family ties of the co-founders of NEXO and it was already not so simple. Finally, friends aren’t really friends anymore: Georgi Shulev was removed from his position in September 2019. We understand that he confused the wallets (his own and those of the company). Moreover Shulev affirms without complex (paragraph 109):
“(i) it was not uncommon to mix personal and business assets in personal accounts, which was the case here “.
Is it worth commenting?
Shulev had retained access to some wallets of the company
The day after his dismissal, Shulev attempted to log on to BitMex where bitcoins (BTC) were kept. Too late to empty the accounts. Nexo, here one of the subsidiaries of NEXO GROUP based in the Cayman Islands, had also contacted BitMex. In a very detailed court reportNexo and Shulev are vying for ownership of the wallet which contains 880 bitcoins (BTC). The estimate in June was £30million. 1451,028 bitcoins had been deposited in May 2019 from a corporate account: a few bitcoins must have been lost along the way. Other digital wallets are also in the possession of Shulev.
Who owns bitcoins (BTC)?
A first bizarre agreement is reached in 2021: Shulev must return the keys to the wallets in exchange for a million dollars. The two parties not trusting each other, the confusion continues. Shulev owns nine other assets, details of which appear in the report. These assets come from Nexo accounts from Binance, Kraken, and Huobi. In the meantime, the accounts are frozen: in full bearmarketand with its fixed assets, Nexo estimates the loss at $7.9 million. Between November and July 2022, bitcoin fell from $69,000 to $17,500, while ether (ETH) plunged from $4,850 to $875.
Shulev, already CEO of Finblox Ltd, created AXON
We better understand this angry email from NEXO (above)… Georgi Shulev must therefore receive $1,000,000.00 in USDT and NEXO Tokens. For his new business?
The judge finally considered that the wallets had been opened in the name of Nexo to take advantage of the spreads between the exchanges. Nexo therefore wins the game, but Shulev escapes with a sort of golden parachute. However, he “did a little” in the fund.
Nexo confirmed to have recovered 871.5 bitcoins on BitMEX account on August 17, 2022. Nexo should also recover the other 9 wallets containing various cryptocurrencies.
For English-speaking lawyers, here is a link that explains the disputes between Shulev and Nexo in detail.
Things are happening on the exchanges… The leniency vis-à-vis the embezzlement of funds from Shulev, who does not hide it, is astounding. No investigation is carried out either to verify Nexo’s accounts. It seems normal to mix personal accounts and those of the company (thus customers). Not being a lawyer, I have the impression that something escapes me.
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