Crypto Lender Nexo Battles former co-founder

London-based cryptocurrency lender Nexo is taking legal action against a former executive who claimed partial ownership of an account the company claims holds company assets.

Nexo asked a UK High Court on Wednesday, according to a Law360 report, to order Georgi Shulev to transfer nine types of cryptocurrencies including bitcoin and ether to the company as part of a July settlement agreement.

Under this agreement, Shulev himself is set to receive $1 million in USDT and Nexo tokens over five installments.

The lender claims it has been locked out of its corporate account at a time when crypto asset prices have plunged. Losses related to the assets in the account are about $7.9 million, the lawsuit says.

Nexo and Shulev have been fighting over the account, estimated to hold 880 bitcoin, since his position ended in September 2019. The company claims the account is used for corporate purposes, while the former director claims he opened it in a personal capacity and claims ownership of some of the crypto assets.

Shulev gained access to the account even after he was removed by the board, but claims he only opened it using his work email for “convenience,” according to a lawsuit.

Nexo’s claim now says it is being “deprived” of access to the account and that the market value of its assets has fallen significantly during the time it has been banned.

The lender is “entitled to and requires damages for the breach,” to be evaluated in the account’s base currency of U.S. dollars, the reported claim said.

Why the disputed account was blocked

On the day he was fired, Nexo’s board revoked Shulev’s access to both the company’s email and the account in question, which is opened with the trading platform BitMEX.

The next day, he made a futile attempt to access the account from his home IP address.

On September 15, Shulev contacted HDR Global – BitMEX’s operator – and requested a change of email address to say he was no longer the owner of the old ID and believed his money might be stolen.

However, Nexo’s head of trading had warned the custodian Shulev may try to “seize funds.” HDR froze the account and asked the Supreme Court to find out who the rightful owner was.

Settlement agreement in limbo

After Shulev was asked to return the nine classes of cryptocurrencies, he reportedly indicated an unwillingness to do so until Nexo made its first installment payment.

“Transferring the full amount of the assets at the moment to Nexo and simply sharing the comfort of being able to receive only part of the compensation after Nexo has not complied with the agreement as a first step on their part does not give me comfort that they will comply and provide the rest of the settlement, he told the court.

But the settlement agreement required both sides to inform HDR that the dispute was over, once the transfer of assets was complete. The situation is now at a stalemate, and Shulev still refuses to comply.

He has also refused to waive any rights and claims to the disputed BitMEX account – another provision of the July agreement.

“Shulev has wrongfully retained, and continues to retain, the nine assets from Nexo, their rightful owner,” the company said.

Nexo refused to comment on the case, while Shulev could not be contacted.

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