Nexo says it ‘hasn’t given up’ on bailout for rival Crypto Lender Vauld
by James · December 26, 2022
Nexo has denied reports that talks about the potential acquisition of troubled rival crypto lender Vauld have ended, stressing that the decision on the future of the rival lender is in the hands of the firm’s creditors’ committee, not its former CEO.
Rumors that negotiations had collapsed were sparked by an email sent by Vauld’s founder and CEO Darshan Bathija to the firm’s creditors, who said that discussions with Nexo “unfortunately have not come to fruition.”
After halting withdrawals from its platform in early June, Vauld filed for protection from creditors and lawsuits in a Singapore court, with the move very similar to Chapter 11 bankruptcy in the US bankruptcy code. Vauld reportedly owed a total of $402 million to his creditors, including the now bankrupt crypto exchange FTX.
Nexo announced plans to acquire Vauld immediately after Vauld’s problems came to light, with the two parties signing an exclusivity period, which according to Nexo is not over.
For the deal to be cancelled, Nexo added, the terms of the exclusive talks require mutual agreement – which is also not the case.
“Nexo has not given up trying to save Vauld and help its creditors recover the maximum possible platform funds,” said Nexo managing partner Kalin Metodiev Decrypt.
Vauld creditors’ concerns
Today, Nexo has also sent Vauld’s creditors an open letter and a final amended proposal for acquisition (a copy of which Decrypt reviewed), and said that despite Nexo’s “genuine intention to help as quickly as possible”, the firm’s transaction team “faced daily challenges, such as receiving slow and sparse financial and legal due diligence information and facing bias from the process administrator, Kroll (Singapore).”
Describing the administrator’s actions, Nexo said Kroll “appeared to direct the solution towards an active management arrangement rather than a loan arrangement, which would expose the former creditors to risk and require them to rely on aggressive return projections to recover losses.”
“As an industry leader, we are disappointed to see a handful of people with self-serving agendas trying to overcome the narrative and prevent creditors from making their best decision,” Metodiev said Decrypt. “We hoped that the bad actors have largely left the blockchain space, but it’s clear that we as a community still have work to do.”
Vauld’s concerns reportedly include Nexo’s plans to gradually phase out the US market, where the Singapore-based company has many customers. In today’s proposal, however, Nexo said it intends to acquire Vauld’s customer base, all cryptocurrency owned by Vauld, and all cryptocurrency attributable to Vauld’s customers — as well as all liabilities arising from ownership of the acquired assets.
Nexo added that all customers – unless subject to restrictions in their respective jurisdiction’s regulations – will be able to borrow, earn and exchange the digital assets allocated in their new accounts with immediate effect.
Additional measures include an infusion of capital from Nexo’s balance sheet, effectively reducing the asset shortfall by 10% to all new Nexo customers, and no lock-in period for asset withdrawals.
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