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

Vauld turned down a new takeover bid from crypto finance firm Nexo, citing concerns about the company’s financial health.

According to The Block, Vauld “unanimously” rejected Nexo’s proposal, with one Vauld creditor stating that more evidence of Nexo’s solvency is required. Nexo has until January 6, 2023, to respond, according to Vauld.

Nexo’s announced departure from the United States means that its creditors in the United States have no recourse if Nexo fails. Nor has Nexo provided a “financial model” to demonstrate its ability to fill the $400 million hole in Vauld’s balance sheet, raising concerns that Vauld could be dragged into a second liquidity crisis if Nexo proves insolvent, according to one creditor.

Vauld has until January 20, 2022 to develop a restructuring strategy.

Nexo presented its most recent acquisition proposal to Vauld’s creditors on December 26, 2022, after initially expressing 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 withdrew $200 million from the platform following the collapse of several crypto entities. Later, the company halted withdrawals and requested a moratorium order in Singapore to protect itself from creditors while it restructured.

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

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

To avoid bankruptcy and continue operations, crypto mining firm Argo Blockchain sold its Helios facility in Texas to crypto bank Galaxy Digital Holdings for $65 million. Bloomberg reported on December 2, 2022 that venture capital firm V Ventures bid $100 million for a 90% stake in the distressed Asian exchange Zipmex.

The Securities and Exchange Commission of the United States has barred Binance US from purchasing the assets of the insolvent crypto broker Voyager Digital. Binance US is a separate entity from Binance, but it reportedly licences its exchange software from its namesake.

Voyager declared bankruptcy in July 2022 after suffering significant losses due to unpaid loans to crypto hedge fund Three Arrows Capital, which has also declared bankruptcy.

Binance.US announced in December 2022 that it would purchase Voyager’s crypto assets for their fair market value, which was around $1.002 billion at the time, plus a “additional” $20 million consideration.

At the time, it stated that it intended to return customer funds in accordance with “court-approved disbursements.”

The SEC now claims that it is unclear how Binance US would complete such a large transaction based on the information provided. It was also concerned about not having a clear view of the company’s finances.

As a result, it anticipates Binance filing a revised disclosure.