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Nexo Solvency Needs to Be Proven as Vauld Rejects Latest Acquisition Proposal

2 mins
Updated by Ryan Boltman
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In Brief

  • Vauld blocks Nexo's latest acquisition offer as Nexo's solvency remains uncertain amid its gradual exit from the U.S.
  • Nexo expressed interest in buying Vauld in July 2022.
  • Crypto acquisitions are increasing as companies look to survive a prolonged bear market.
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Vauld rejected a renewed takeover proposal by crypto finance firm Nexo, citing concerns with the company’s financial health.

According to The Block, Vauld “unanimously” rejected Nexo’s proposal, with one Vauld creditor stating that they require further proof of Nexo’s solvency. Vauld has given Nexo until Jan. 6, 2023, to respond.

Vauld Cites Key Missing Information as Reason for Rejection

Vauld added that Nexo’s announced departure from the U.S. means that its U.S. creditors have no recourse if Nexo fails. Nor has Nexo provided a “financial model” to prove its ability to fill the $400 million hole in Vauld’s balance sheet, sparking fears that Vauld could get caught up in a second liquidity crisis if Nexo proves insolvent, one creditor told the Block. 

Vauld has until Jan. 20, 2022, to develop its restructuring plan.

Nexo submitted its latest acquisition proposal to Vauld’s creditors on Dec. 26, 2022, after expressing its initial interest in the distressed crypto firm in July 2022.

Nexo signed a 60-day term sheet in July 2022 to acquire the troubled exchange after Vauld’s customers pulled $200 million from the platform as the collapse of several crypto entities rattled investor confidence. The business later paused withdrawals and sought a moratorium order in Singapore to protect it from creditors while it restructured.

Nexo’s managing partner told the Block that Nexo would host an ask-me-anything session “mid-next week” to address Vauld creditors’ concerns.

Crypto Buyouts to Improve Liquidity on the Rise

Several crypto companies stung by the collapse of the TerraUSD stablecoin in May 2022 and crypto’s ensuing bear market have either filed for bankruptcy or secured funding through acquisitions.

Crypto mining firm Argo Blockchain sold its Helios facility in Texas to crypto bank Galaxy Digital Holdings for $65 million to stave off bankruptcy and continue operations. Venture capital fund V Ventures bid to acquire a 90% stake in distressed Asian exchange Zipmex for $100 million, Bloomberg reported on Dec. 2, 2022.

The U.S. Securities and Exchange Commission has blocked Binance US from buying the assets of distressed crypto broker Voyager Digital. Binance US is a separate entity from crypto exchange Binance but reportedly licenses its exchange software from its namesake.

Voyager filed for bankruptcy in July 2022 after losing big through unpaid loans to crypto hedge fund Three Arrows Capital, which has also filed for bankruptcy.

Binance.US said in Dec. 2022 that it would buy Voyager’s crypto assets for their fair market value, approximately $1.002 billion at the time, and add an “additional” $20 million consideration. 

It said at the time that it wanted to return customer funds according to “court-approved disbursements.”

Now, the SEC says that it is not clear from the information provided how Binance US would close such a significant transaction. It also expressed concern at not having a clear window into the company’s finances.

Accordingly, it expects Binance to file a renewed disclosure.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...