Bitcoin, the world’s largest cryptocurrency, is down more than 50% since the start of 2022.
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Embattled cryptocurrency lender Vauld has received a lifeline from biggest competitor Nexo, a sign of growing consolidation in the crypto market.
Nexo said Tuesday it had signed a term sheet with Vauld giving it 60 days of exclusive talks to explore an all-equity acquisition of the company. If successful, Nexo has announced its intention to restructure the business and continue its expansion in Southeast Asia and India.
Vauld suspended operations on Monday and said it was exploring restructuring options due to “financial challenges” posed by a sharp drop in cryptocurrencies. The Singapore-based company is backed by the likes of Coinbase and Silicon Valley billionaire Peter Thiel.
It is the latest company to be caught up in the chaos gripping the crypto world lately. In the past month alone, Celsius, another crypto lending company, put an indefinite pause on withdrawals citing “extreme market conditions.” Meanwhile, Three Arrows Capital, a crypto hedge fund, filed for bankruptcy protection days after it collapsed into liquidation.
Asked how much Nexo was willing to pay for Vauld, co-founder Antoni Trenchev said it was “premature” to talk about a valuation at this stage. However, he added that he was “optimistic” that a deal could be reached.
“We are starting due diligence,” the Nexo chief told CNBC. “We have a 60 day exclusivity window where they will open the books. You will see everything. Is there a hole? How big is the hole? Where are the assets? Who are the counterparties?”
Nexo previously gave Celsius a letter of intent offering to buy the company, but said the company turned down its offer.
With no government to turn to, several crypto firms have sought help from their peers in hopes of a bailout instead.
Sam Bankman-Fried, the billionaire behind crypto exchange FTX, has become a lender of last resort for the industry. FTX last week signed a deal giving it the option to buy crypto lending firm BlockFi, while Bankman-Fried’s quantitative trading boutique Alameda Research also extended a line of credit to Voyager Digital, a struggling crypto brokerage that froze all operations last week.
Trenchev compared the current market situation to the “Panic of 1907”, a series of bank runs that preceded the creation of the Federal Reserve in 1913. Without a central bank to rely on at the time, the remaining lenders who survived to the crash were saved. by the best financiers, notably JP Morgan.
“I think we’re going to see a period of consolidation and mergers and acquisitions. And it’s going to end with fewer companies, but stronger ones with better business practices,” he said.
Bitcoin had its worst month on record in June, losing over 38% of its value. The world’s largest cryptocurrency is down more than 50% since the start of 2022.
Crypto lender Nexo offers to buy embattled rival Vauld
Source link Crypto lender Nexo offers to buy embattled rival Vauld