Nexo, a crypto company that allows users to borrow against a variety of crypto, has announced it is no longer interested in pursuing the deal to acquire financially distressed crypto lender, Vauld Group.
According to a news report from The Block, the potential deal was terminated after a 6 months discussion for a potential buyout. Darshan Bathija, Vauld’s Founder and CEO has recently emailed the firm’s creditors that the deal between the firm and Nexo has unfortunately come to an end.
The reasons stated in the email that led to the termination of the deal include the loss of funds in the insolvent FTX Exchange, loss of money in the collapse of Terra, the seizure of assets by authorities in India, and a huge amount of loan receivables from Amber Group. In addition to the aforementioned, Vauld has a huge customer base in the United States and Nexo recently announced its plans to exit the U.S. territory.
Furthermore, the revised proposal of the deal which was sent twice does not allow for a debt tender offer via Reverse Dutch Auction (the “RDA”), which would give creditors an early exit option. Vauld claims that restructuring must include an early departure option based on its previous interactions with creditors.
Vauld’s Financial Situation
In July, Vauld made an announcement on Twitter that it was experiencing financial issues and thus suspending customers’ withdrawals. The crypto lender stated that its issues stem from a host of reasons such as volatile market conditions, financial difficulties of its key partners, and the crypto market climate at the time.
We are facing challenges despite our best efforts. This is due to a combination of circumstances such as the volatile market conditions, the financial difficulties of our key business partners inevitably affecting us, and the current market climate.
— Vauld (@VauldOfficial) July 4, 2022
The firm added that there have been sizable client withdrawals totaling more than $197.7 million Since June when the downturn of the cryptocurrency market was precipitated by the de-pegging of Terraform Lab’s UST stablecoin, Celsius Network stopping withdrawals, and 3AC defaulting on loans.
Vauld Group then submitted an affidavit containing a list of its debtors and the amount of liability it faces. Vauld may be liable for up to $402 million in total, $363 million of which is owing to retail investors, according to court filings.
A report from Bloomberg then stated that the Singapore High Court has granted Vauld a three-month creditor protection, giving room for it to be purchased by Nexo. Presently, Vauld has been given another extension period until January 20 to explore its options to relieve its financial situation.
