In the first week of July, Nexo offered to take over its competitor Vauld, which was then plunged into serious financial difficulties. The buyer agreed to a due diligence for a period of 60 days, which has just been extended by one month.
Nexo and Vauld: talks continue
Prior to halting its operations due to “financial difficulties,” Vauld offered a range of crypto services to investors. This Singapore-based (but mainly operating in India) company offers fixed deposits, asset-backed loans and borrowings, among other things. With the crash of the crypto market and this exceptional bear market, the company decided to stop the fees. Following which, Nexo offered to acquire the company 100%.
Nexo is one of the most popular crypto platforms. It allows its customers to earn compound interest on their cryptocurrency. It is also a borrowing and lending platform. In early July, Nexo signed a term sheet setting out plans to acquire Vauld’s assets. Under the agreement, Nexo has a 60-day exploration period. This deadline has just been updated. The duration of the due diligence has been extended for an additional 30 days. Talks between Nexo and Vauld continue.
A deficit of 75 million dollars for Vauld
In its statements, Nexo claims to be one of the few crypto companies able to help struggling competing companies. The platform aims to provide immediate assistance to Vauld which has a deficit of $75 million. It also has a long-term development plan. On July 8, Vauld filed for a moratorium in Singapore courts. This is a suspension of any legal action against the company. The idea is to have some leeway for restructuring.
According to Vaulld, the volatile market conditions would have jeopardized the interest of depositors. Darshan Bathija, CEO of the company explains: “The financial difficulties of our major trading partners inevitably affect us, as well as the current market climate, which has led to a significant number of customer withdrawals exceeding $ 197.7 million since on June 12, 2022”.
A possible return to solvency?
Vauld is working on a restructuring plan during the moratorium. In particular, the company is helping credit giant Nexo conduct due diligence regarding a possible takeover. Despite his struggles, Darshan Bathija says his exchange could be solvent again if the price of Bitcoin (BTC) hits $55,000. Good news for investors immersed in this financial tumult.
Bathija states, “It can be broadly estimated that Vauld would break even when BTC rises in price to around 55,124.60 USD/token, which represents a price increase of around 136% from its 1st price. August 2022 of 23,314.20 USD/token”. So far, Vauld has no plans to liquidate the company. The negotiation with Nexo remains his top priority. If Nexo does not buy the platform, Bathija would have other backup options.
The situation of Vauld Crypto Exchange reinforces the pessimism of investors in the face of a market that is going through a difficult period. Even if the main cryptos have been bouncing around lately, news from Vauld is sure to affect sentiment. This failure may end up convincing users that the concept of crypto lending and borrowing remains vulnerable.
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