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Nexo has denied reports that talks over the potential acquisition of troubled rival crypto lender Vauld have been terminated. In response, a person familiar with the matter tells Decrypt that any decision about Vauld's future, as Nexo sees it, is in the hands of the firm’s creditor committee, not its former CEO.
Rumors that negotiations had collapse were sparked by an email sent by Vauld founder and CEO Darshan Bathija to the firm's creditors, which said that discussions with Nexo “have unfortunately not come to fruition.”
After halting withdrawals from its platform at the beginning of June, Vauld filed for protection against creditors and lawsuits in a Singapore court, with the move being very similar to Chapter 11 bankruptcy of the U.S. bankruptcy code. Vauld reportedly owed a total of $402 million to its creditors, including the now-bankrupt crypto exchange FTX.
Nexo announced plans to acquire Vauld immediately after Vauld’s troubles came to light, with the two parties signing an exclusivity period, which, according to Nexo, is not over.
In order for the deal to be called off, according to to the person in the know, the terms of the exclusive talks require mutual agreement—which is also not the case.
“Nexo has not given up on its attempt to save Vauld and help its creditors recover the maximum possible platform funds,” Nexo managing partner Kalin Metodiev told 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 has reviewed), saying that despite Nexo’s “genuine intention to help as promptly as possible,” the firm’s transaction team “faced daily challenges, such as receiving slow and incomprehensive financial and legal due diligence information and encountering bias from the process administrator, Kroll (Singapore).”
Describing the administrator’s actions, Nexo said Kroll “seemed to be directing the solution towards an active management arrangement rather than a lending arrangement, which would expose the former creditors to risk and require them to rely on aggressive return projections to recover their losses.”
“As an industry leader we are disappointed to see a handful of people with self-serving agendas trying to highjack the narrative and bar the creditors from making their best decision," Metodiev told Decrypt. "We were hoping that the bad actors have mostly departed the blockchain space, but it is obvious that, as a community, we still have work to do."
Vauld concerns reportedly include Nexo’s plans to gradually phase out the U.S. market, where the Singapore-based company has many clients. However, in today’s proposal, Nexo said it is intends to acquire Vauld’s customer base, all cryptocurrency owned by Vauld, and all cryptocurrency attributable to Vauld’s clients—as well as all liabilities arising out of the ownership of the acquired assets.
Nexo added that all customers—unless subject to restrictions in their respective jurisdictions’ regulatory framework—will be able to borrow, earn, and exchange against the digital assets allocated in their new accounts, effective immediately.
Additional measures include an injection of capital from Nexo’s balance sheet, effectively reducing the asset deficit by 10% to all new Nexo customers, and no lock-up period for asset withdrawals.