Key Takeaways
- Nexo and Vauld have signed an indicative term sheet allowing Nexo an exclusive 60-day opportunity to look into the firm acquisition.
- Vauld suspended client withdrawals on Monday, citing challenging market circumstances.
- In the aftermath of Terra’s demise, the Three Arrows Capital problem, and a general market slump, several other crypto businesses have experienced similar challenges in recent weeks.
- Vauld is among numerous crypto loan companies experiencing collapse owing to the bear crypto market.
Nexo is in the process of acquiring Vauld.
On Tuesday, Nexo said it had signed an indicative term sheet with Vauld, providing the latter with an exclusive 60-day opportunity to explore a prospective acquisition. Nexo intends to purchase up to 100% of the company to grow its footprint in Asia.
Vauld said on Monday that it had suspended client withdrawals, admitting that the company was encountering issues due to market volatility. Since June 12, a blog post disclosed that clients withdrew $197.7 million, resulting in a liquidity issue.
Nexo seeks to acquire Vauld. Image: Iqstock
Like Celsius, Voyager Digital, BlockFi, Babel Finance, CoinFLEX, and CoinLoan, the crypto lender is the most recent company to encounter significant difficulties due to Terra’s failure, Three Arrows Capital’s bankruptcy, and the overall downturn in crypto asset values. As the market has declined, clients have rushed to withdraw their cash from cryptocurrency lenders out of concern of bankruptcy difficulties.
BlockFi said on Friday that it had signed an agreement to be bought by FTX.US for up to $240 million, with FTX.US proposing an additional $400 million rolling credit facility. At the same time, Nexo reached out to Celsius last month for a prospective asset acquisition after it suspended withdrawals (neither firm has shared an update on the offer yet).
In a press release, Nexo compared current events to the Bank Panic of 1907, claiming “excessive leverage in the system” as the fundamental cause of the market-wide catastrophe. The company said it was in a position to assist troubled industry players and disclosed that it had recruited two of the most prestigious Wall Street firms to advise on prospective acquisitions. Antoni Trenchev, co-founder and managing partner of Nexo, said their essential goal is to determine if a Nexo-led revamp can restore the company’s viability and profitability within their business model and corporate culture.
In a press release, Nexo described its intentions to give emergency support to Vauld so that it can continue to fulfil client withdrawals. The company also noted that Vauld’s position in the Southeast Asian market coincided with its objectives. In addition, it said that it would consider integrating more retail and institutional products, provide liquidity, give legal and regulatory experience, and help with risk management procedures.
Though the purchase would only be finalised if Vauld satisfies Nexo’s due diligence criteria, the Vauld CEO and co-founder were thrilled that his company had identified a viable way ahead. “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 simultaneously to execute upon both companies’ ambitious roadmaps, regardless of the market conditions,” he said.