Nexo, a leading cryptocurrency lender has made an offer to purchase Vauld, a distressed competitor that had stopped operations due to financial problems. This proposal was made after the Singapore-based company stated that it was looking into restructuring alternatives.
Nexo Secures Exclusive Agreement to Explore Vauld’s Acquisition
Vauld, the Singapore-based trading platform and crypto lending company Vauld had announced that customers would be unable to withdraw funds. A major cryptocurrency lender Nexo revealed that they had signed an indicative agreement with Vauld. This gives Nexo a 60-day period of exploratory talks to explore the possibility of acquiring the rival.
On Monday, Vauld’s management said it’s halting operations because of “financial challenges” due to “the volatile market conditions.” It also cited financial difficulties at its partners and blamed the current market climate for the withdrawal of almost $198 million by its customers in about three weeks.
On the backdrop of this latest sign of stress in the industry, Nexo noted in a statement that it’s now up to “capable and well-capitalized entities to aid the sector.” In case of a satisfactory outcome of the initiated due diligence process, the lender plans to acquire up to 100% of Vauld, reorganize operations, and seek “deeper presence in Asia.”
“We sympathize with all affected by the drastic market downturn. However, tough times teach us how important it is to have a viable business model and manage risk. It is inevitable that the industry leaders will navigate out of the current crisis,” commented Tatiana Metodieva, Nexo’s head of Corporate Finance and Investments.
Nexo assured it “aims to provide immediate assistance and alleviate withdrawal limitations put in place on Vauld’s platform,” which affected more than 800,000 customers. At the same time, the lender is planning for the future, including by exploring options to provide Vauld’s customers with a wider range of retail and institutional products and improved services.
Vauld’s CEO Darshan Bathija was quoted as stating that “Operating under the Nexo umbrella puts us instantly in a position of strength to continue the execution of our fiduciary obligations to our customers and at the same time to execute upon both companies’ ambitious roadmaps, regardless of the market conditions.”
The cryptocurrency lending industry saw substantial growth over the past few years. However, the market slump and other negative events (such as the May crash of the UST stablecoin) have had a significant impact on the sector. U.S. lender Celsius withdrew its funds from June, once again citing market conditions. Voyager did the exact same thing a few days earlier. Nexo also had offered to purchase the assets Celsius.
What do you think will happen to the cryptocurrency industry, and specifically the lending sector? Please leave your comments below.
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