London-Based Nexo Signs Term Sheet To Acquire Troubled Crypto Platform Vauld: Report

Crypto lender Nexo is reportedly eyeing acquisition of crypto platform Vauld, which announced suspension of its operations on Monday (July 4). The London-based lender has set in motion the process for acquisition and has signed an indicative term sheet.

The term sheet currently grants Nexo a 60-day exclusive exploratory period for conducting due diligence, the company told The Block.

“We have to see what exactly is on their books and it’s going to take a little while,” Nexo cofounder Antoni Trenchev was quoted as saying. “But since we have the exclusive exploratory period, we are the only ones looking at them right now.”

Vauld’s client withdrawals will remain halted for now. Nexo could either restructure or refinance Vauld depending on its due diligence. 

According to Trenchev, Nexo could provide instant liquidity to Vauld by buying its assets or investments, if the crypto platform has some assets staked or has made investments for a longer period. If Vauld’s assets are lost, Nexo could potentially replenish them if it’s plausible.

“We have to view it in the overall context of if we step in, can we restructure the business so that it is functioning again, so that it is profitable within the Nexo umbrella, which as a company is profitable and whether we can accumulate that,” Trenchev said.

The slowdown in the global economy has hit the cryptocurrency market hard, with the prices plummeting. Amidst this, Singapore-based Vauld became the latest crypto platform to face financial challenges. 

Founded in 2018 by Darshan Bathija and Sanju Sony Kurian, the Coinbase-backed platform supported over 30 cryptocurrencies and had partnerships with exchange and custody partners such as Binance and BitGo. It allowed users to lock their cryptos into fixed deposits with up to a 12.68% interest rate. It helped users explore ways to earn and build their crypto wealth.

The collapse of Terra Luna, suspension of withdrawals by crypto currency platform Celsius, and default by cryptocurrency hedge fund Three Arrows Capital hit the confidence of crypto investors. These led to a “significant amount of customer withdrawals”, Vauld said in its announcement about suspension of withdrawals, trading and deposits. 

As crypto prices started crashing in the past few weeks, coupled with India’s taxation regime and the resultant downturn in crypto trade volumes, Vauld also laid off about 30% of its workforce in June.

However, Nexo seems to be more interested in Vauld’s strong presence in India and Southeast Asia.

Explaining the reason behind acquiring Vauld, Trenchev said that the platform has “huge traction” in India and Southeast Asia, which are important markets for Nexo. 

Meanwhile, Vauld is also optimistic about the deal. “Operating under the Nexo umbrella puts us instantly in a position of strength to continue the execution of our fiduciary obligations to our customers and at the same time to execute upon both companies’ ambitious roadmaps, regardless of the market conditions,” Vauld cofounder and CEO Bathija was quoted as saying.

In July last year, Vauld had raised $25 Mn in its Series A funding round, led by Valar Ventures. Pantera Capital, Coinbase Ventures, CMT Digital, Gumi Cryptos, Robert Leshner and Cadenza Capital had also participated in the round.