Explore the regulatory landscape and legal realities of digital asset recovery in Bulgaria, with insights from Mikov & Attorneys on VASP registration, the MiCA transition, continental law procedures, and the exchange liability question.
The latest session in Recoveris’ Digital Asset Recovery Around the World series took our Blockchain Investigations Manager Fred Buret to Bulgaria, where he sat down with Konstantin Mikov, founder of Mikov & Attorneys and a specialist in financial dispute resolution with over a decade of experience across Forex, CFD, and crypto-related cases. The conversation covered the structure of Bulgaria’s crypto industry, the regulatory transition underway with MiCA, and what it actually takes to pursue recovery through the Bulgarian legal system.
Key Takeaways for Legal Professionals, Compliance Teams and Asset Recovery Practitioners
A Maturing but Fragmented Crypto Landscape
Bulgaria currently has approximately 180 entities registered as Virtual Asset Service Providers (VASPs) under its pre-MiCA registration regime, but only around 30 are estimated to be actively operating with real business activity. Many registered entities have minimal footprints.
Some of the most prominent names associated with Bulgaria, including Nexo, maintain their legal structures offshore while running administrative functions locally. This offshore-onshore split is a pattern Mikov has encountered repeatedly in investigations and says a lot about the complexity of jurisdiction when disputes arise.
The MiCA grandfathering period ends in June 2026. As of the webinar, only one SASP license had been issued in Bulgaria, through an investment firm that used a regulatory bridge between existing investment firm authorization and the new MiCA framework. Most businesses, according to Mikov, are only beginning to understand the compliance and capital requirements a full license actually entails. The competitive dynamic for licensing is increasingly playing out at the EU level, with major platforms applying in France and Germany before passporting into Bulgaria and other markets.
The Forex-to-Crypto Migration in Investment Fraud
Bulgaria provides a distinctive vantage point on the shift from Forex and binary option fraud toward crypto scams. Mikov has observed the transition firsthand across his caseload: the fraudulent platforms and social engineering tactics that dominated Forex and CFD cases a decade ago have progressively migrated to crypto, applying the same investment narrative, exceptional returns, leverage, and urgency, to a new asset class.
For legal professionals, the practical implication is that many victims of crypto investment scams have case profiles overlapping with legacy Forex fraud, and the perpetrators are often the same networks operating in a different wrapper. Understanding this migration is increasingly relevant when building case history and assessing recovery routes, particularly for clients with mixed exposure across both types of platforms.
Criminal Courts as the Gateway to Information
Bulgaria is a continental law jurisdiction, and this fundamentally shapes the recovery process. Unlike common law jurisdictions where civil disclosure mechanisms can compel exchanges to provide KYC data, Bulgarian practitioners must generally initiate a criminal complaint first.
The criminal investigation is the primary mechanism for compelling disclosure: identifying the individuals or entities that received stolen crypto, obtaining wallet ownership information, and building the evidentiary record needed to support a civil claim. Formal access to the full criminal file comes only at indictment, a stage that arrives late in the procedure. Before that point, information sharing depends on the public prosecutor’s judgment.
This creates a meaningful bottleneck for victims. The timeline between a criminal complaint and actionable identification of the parties is long, and civil recovery proceedings can only proceed once that identification is in place. Swift action at the moment of the incident, including on-chain tracing and asset blacklisting, is critical to preserving the forensic record while the legal process catches up.
Exchange Liability: On-Ramp, Off-Ramp, and the AML Gap
One of the session’s substantive discussions centered on the liability of the exchange where the victim converts fiat to crypto, and the exchange receiving the fraudster’s funds.
On the victim’s side, licensed exchanges carry KYC and AML obligations that include understanding why a client is buying and monitoring unusual activity. Mikov’s view is that exchanges represent the last practical point of intervention before funds enter the crypto ecosystem, and that a properly executed KYC process should raise flags in many scam scenarios. On the fraudster’s side, a receiving exchange that is EU-based is obligated under AML rules to understand what business its client is conducting. In cases where the right questions are asked, that business model is often not difficult to identify.
The practical challenge is that most fraudster-side platforms are offshore, non-communicating, and beyond the reach of both lawyers and public prosecutors. This remains one of the most consistent friction points across crypto recovery cases globally, not only in Bulgaria.
What MiCA Changes, and What It Does Not
MiCA’s extended scope will bring a significantly broader range of crypto service providers under licensing and reporting obligations, including certain automated exchange services previously operating without AML requirements.
For asset recovery purposes, this matters because the obligation to report transaction counterparties will make it substantially easier to identify who sent and received funds through licensed platforms. Mikov described this as a potential significant improvement for victims of scams, provided the platforms involved are licensed within the EU. The limitation stays the same: when the receiving or routing platform is offshore and unlicensed, practical information access does not improve with MiCA.
The case for acting quickly, tracing funds before they exit licensed infrastructure, and coordinating with forensic specialists who can flag assets across exchange networks before they move beyond reach, remains as strong as ever.
Watch the Full Session
Bulgaria’s legal and regulatory landscape illustrates a dynamic we observe across continental law jurisdictions: recovery is not a single procedure, but a sequenced process where the right entry point, the right timing, and the right forensic support determine whether funds can be reached at all.
Watch the full webinar on YouTube: https://www.youtube.com/watch?v=058FvBEE4Qk
