Nexo Set to Purchase Struggling Lending Platform Vauld

Digital asset lending platforms continue to find their footing in what are undoubtedly unstable times.  While some like BlockFi, Celsius and Vauld have faltered – requiring the difficult decision to halt certain services – the current state of disarray has provided others with an opportunity to capitalize on the situation.  The most recent example of this comes from Nexo, as the company has just announced that it has “signed an indicative term sheet with Vauld.”

The Details

Per its announcement, Nexo states that by signing a term sheet the company has been given a “60-day exclusive exploratory period related to its intended acquisition of Vauld.”  

For Nexo, this opportunity is about more than just taking advantage of a bad situation by purchasing a struggling company on the cheap.  Instead, it believes that,

1. As a thriving outfit, Nexo has a responsibility to ensure it helps ‘distressed industry participants’.  In doing so, it can help ensure the sector as a whole thrives, benefiting all participants.
2. It will facilitate an expansion of services on offer by Nexo in to Asia.

Notably, Nexo also indicates that its intent to purchase 100% of Vauld does not end at simply offering a way out of its current troubles.  Rather, the company states that it’s “…aim is not only to protect Vauld’s existing customer base to the fullest extent possible but also to give them access to an improved range of services.”

This move comes only a short period after Vauld announced that it had taken a move from Celsius’s playbook by halting all platform deposits and withdrawals, while it tried to get a handle on its finances.  It was only yesterday the company stated, “The Vauld management wishes to inform that we are facing financial challenges despite our best efforts.”  

Like many, the company stated that much of its woes can be attributed to the recent market events involving both Three Arrows Capital, and Terraform Lab’s.  Overall, Vauld indicated that within a 3 week span, it had processed $197.7M in withdrawals – pushing it beyond its limit, and resulting in its potential acquisition by Nexo.

Competitors

Beyond Nexo and Vauld, various other big-name lending platforms have recently announced major decisions.  The following are a few examples of these, as each look to re-structure and move beyond recent woes.

BlockFi

Within the digital asset lending space, few are more well known than BlockFi.  Despite its dwindling rates, which long preceded the current market turmoil, it has managed to remain quite popular among fans of CeFi.  Unfortunately for BlockFi, this popularity has not shielded it from turmoil.  This was most recently on display when BlockFi announced that it signed a definitive agreement with FTX US which entailed,

1. A $400M revolving credit facility which is subordinate to all client funds, and
2. An option to acquire BlockFi at a variable price of up to $240M based on performance triggers.

The company indicated that this decision was made out of not only necessity, but out of a matter of principle, stating, “…we fundamentally believe in protecting client funds. Not only because it’s absolutely the right thing to do, but this also benefits the ongoing health and adoption of crypto financial services worldwide. Therefore, it was important to add capital to our balance sheet to bolster liquidity and protect client funds.”

Celsius

For weeks now, it is believed that Celsius has been teetering on the edge, close to tumbling in to insolvency.  Despite this, the company has managed to stay afloat while paying off nearly $150M in loans to Maker.  While managing to not default on its existing loans is a promising sign, it has not come without a cost.  It is now believed that Celsius has been forced to lay off roughly 20-25% of its staff.

It is not uncommon for a workforce restructuring like this to take place in troubling times, as companies look to streamline operations.  Other companies which have announced notable layoffs as of late include Coinbase, Gemini, BlockFi, and more.

Calm Waters

While each of the aforementioned companies have been either struggling, or bailing out those that are, there remains one growing player in the digital asset lending space that has managed to remain removed from all the commotion – Ledn.io.  This Canadian lending platform has simply continued business as usual, with no need for substantial layoffs, restructuring, or bailouts.

Some times simplicity is best, as made evident through its approach to the market.  By offering interest bearing accounts on only BTC and USDC, and only working alongside large reputable borrowers, those interested in CeFi lending may soon find themselves seeking out the services of Ledn and the calmer waters in which it resides.