Cryptocurrency lender Nexo Offers to Buy Rival Competitor Vauld

Bitcoin, the world’s largest cryptocurrency, has fallen over 50% since the start of 2022.

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The beleaguered cryptocurrency lender Vauld has received a lifeline from larger competitor Nexo in a sign of growing consolidation in the cryptocurrency market.

On Tuesday, Nexo said it had signed an agreement with Vauld giving it 60 days of exclusive talks to explore the possibility of acquiring the company with full capital. If successful, Nexo said it plans to restructure the company and continue expanding into Southeast Asia and India.

Wald on Monday suspended operations and said it was looking into restructuring options due to “financial issues” caused by the steep drop in cryptocurrencies. The Singapore company is supported by such Coinbase and Silicon Valley billionaire Peter Thiel.

This is the latest firm that has recently been embroiled in the chaos that has gripped the crypto world. Just in the last month, Celsius, another crypto lending company, has suspended withdrawals indefinitely, citing “extreme market conditions.” Meanwhile, cryptocurrency hedge fund Three Arrows Capital filed for bankruptcy protection days after it went bankrupt.

Asked how much Nexo would be 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 about the deal.

“We are starting due diligence,” the head of Nexo told CNBC. “We have a 60 day exclusivity window when they 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 sent a letter of intent to Celsius offering to buy the company, but said the company had turned down the offer.

With no government to turn to, several crypto firms instead turned to their peers for help in hopes of a bailout.

Sam Bankman-Fried, the billionaire behind cryptocurrency exchange FTX, has become the industry’s lender of last resort. Last week, FTX signed an agreement to buy crypto lending company BlockFi, while Bankman-Fried trading company Alameda Research also provided a line of credit to Voyager Digital, a crypto brokerage that froze all operations last week.

Trenchev compared the current market situation to the “Panic of 1907,” a series of bank transactions triggered by the collapse of highly leveraged speculative rates.

“I really think that we will see a period of consolidation, mergers and acquisitions. And it will lead to fewer companies, but they will become stronger with better business practices,” he said.

Bitcoin had its worst month ever in June, losing over 38% of its value. The world’s largest cryptocurrency has fallen by more than 50% since the beginning of 2022.