Crypto Crisis: A shady cryptocurrency lender is about to buy a competitor

Crypto Crisis: A shady cryptocurrency lender is about to buy a competitor ...

The incredible crypto shrinkage continues...

Nexo, a cryptocurrency platform that made an offer to purchase Celsius Network's assets, stepped up on July 5 to announce that it has signed a term agreement with Vauld to purchase the troubled crypto financial services company.

'The Bank Panic of 1907,' says the author.

Nexo has a "60-day exclusive exploratory period" in connection with its planned acquisition of Vauld, pending a due diligence investigation.

Nexo said in a statement that the present market conditions "are to a large extent similar to the Bank Panic of 1907, characterized by excessive system leverage, an overabundance of companies in need of a lender of last resort."

"Today, it is again in the hands of a few qualified and well-capitalized entities to come up with systemic solutions and assist the sector," the statement said.

Nexo stated that it has taken this responsibility with the greatest care and has retained the advisory services of two big Wall Street banks to receive top-level advice on the various acquisitions and liquidity provision options currently underway.

'Customers are apprehensive,' says the author.

In a July 4 blogpost, Vauld warned that "we are facing financial difficulties despite our best efforts."

The company cited a "mix of circumstances," such as the highly competitive market conditions and the financial difficulties of key business partners.

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Vauld described the present market environment, which has resulted in more than $197.7 million in customer withdrawals since June 12 when the demise of the cryptocurrency market was caused by the collapse of Terraform Labs' UST stablecoin, the Celsius network's demise, and Three Arrows Capital's default on their loans.

Three Arrows Capital (3AC), a Singapore-based hedge firm, was forced to liquidate by a court in the British Virgin Islands.

The hedge fund paid out its just over $200 million exposure to Luna and its sister UST or TerraUSD, both of which collapsed in May, causing the disappearance of at least $55 billion.

"Long Term Value"

Bathija said in a follow-up tweet that "the completion of this transaction is pending due diligence - which both teams are working on while we speak."

Vauld, a Singapore-based company that is backed by Coinbase Global (COIN) - Get Coinbase Global Inc Reportand billionaire Peter Thiel, laid off 30% of its staff last month and sought to cut executive pay by 50% and lower marketing costs.

Vauld has joined a growing list of cryptocurrency companies that are eliminating staff, including Coinbase, Bybit, Crypto.com, BitOasis, Robinhood, Bitso, Gemin, BlockFi, and BitMex.

Many crypto lenders have encountered liquidity difficulties as a result of these losses, and some of them will find it difficult to fulfill their margin commitments.

Nexo intervened when Celsius announced on June 12 that it would suspend indefinitely several transactions, including withdrawals of funds, due to "extreme market conditions."

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