Nexo's acquisition of Coinbase-backed Vauld called off

Troubled crypto lending platform Vauld on December 26 announced that its possible acquisition and bailout by London-based crypto lender Nexo has been called off. The Coinbase-backed crypto lender notified this to its customers in an email, following an evaluation and rejection of this acquisition proposal by its Committee of Creditors (CoC).

According to the email accessed by Moneycontrol, “Nexo has failed to respond to requests for a comprehensive due diligence exercise on them, including a solvency assessment of Nexo, or otherwise what measures may be able to be agreed upon to provide creditors with a greater level of assurance in the event of Nexo’s insolvency.”

On December 5, Nexo via Twitter had said that it is phasing out its products and services in the USA, which means over 40% of Vauld customers (by value of customer balances) who are based in the US will not have full utilisation of any benefits received under the Revised Nexo Proposal.

“Nexo has yet to respond to our queries as to how they would propose treatment of claims by Vauld’s US-based customers,” Vauld said in the email.

“The Revised Nexo Proposal does not allow for a debt tender offer by way of a Reverse Dutch Auction (the “RDA”) which would give creditors an early exit option. We had explained to them that based on our engagement with creditors, an early exit option is vital to the success of any proposed restructuring,” it added.

Meanwhile, Vauld and its CoC are currently in talks with four fund managers, of which two will be shortlisted to help the company with its restructuring plans.

Last month, Vauld of trying to get a 4-month extension on its moratorium period which was to end on November 7, 2022. As of December 26, the moratorium has been until January 20, 2023.

Vauld had suspended its withdrawals and operations citing financial troubles on July 5, 2022. The company was then raided by the Enforcement Directorate (ED) which led to their bank balances, payment gateway balances and crypto balances worth Rs. 370 crore getting frozen in relation to alleged aiding of predatory lending apps.