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Swiss crypto lender Nexo recently terminated its acquisition deal with embattled Singaporean crypto lender Vauld.
Nexo has ended discussions with rival crypto lender Vauld regarding a potential acquisition deal. According to new reports, Nexo opted out of potentially acquiring the troubled crypto lender after six months of dialogue. Both parties had been in discussions since early July.
The opportunity for Nexo to acquire Vauld initially came after Vauld suspended client withdrawals in early July due to a severe liquidity crunch. Vauld also hired legal and financial advisors to provide potential restructuring options.
At the time of the deal agreement, Nexo entered a two-month exclusive due diligence obligation with Vauld to potentially purchase the company. However, the Switzerland-based crypto lending platform extended the due diligence grace twice. Eventually, both parties formally terminated discussions.
Vauld founder and chief executive officer Darshan Bathija sent an email to the firm’s creditors lamenting the deal’s fate. Part of Bathija’s electronic memo read:
“We have since sought a mutual agreement with Nexo to terminate the existing exclusivity arrangements and we are continuing our active engagement with the shortlisted fund managers in developing a viable strategy that would best serve the creditors’ interests.”
Alleged Reasons for the Nexo-Vauld Deal Termination
According to inside sources, there are several reasons why the Nexos and Vauld deal fell through. One of these is the Singapore-based crypto exchange and lender losing a substantial amount of money in the failed Terra ecosystem. Other alleged reasons include Indian authorities freezing Vauld’s assets, frozen funds in sunken exchange FTX, and massive loan receivables from Amber Group. In addition, due to regulatory constraints, Nexo’s recent announcement to leave the US did not augur well for Vauld. The Singapore-based company has a vast client base in the US, so the potential deal made little sense for Nexo.
Nexo reportedly tried to salvage the deal by presenting terms to Vauld twice, which the latter rebuffed. According to Bathija, Vauld and its creditors were not pleased with the terms Nexo offered. The Vauld CEO explained that Nexo’s revised terms would not accommodate a “debt tender offer by way of a Reverse Dutch Auction”. An RDA would allow creditors to exit early, which Vauld believes is crucial to its proposed restructuring success.
Bathija continued, stating that the benefits from the revised Nexo proposal, including early credit withdrawal, were set at a threshold. The Vauld CEO concluded that the proposed threshold is unachievable by most creditors and would not serve their best interests.
Vauld also accused Nexo of needing to be more transparent regarding its financial condition. As Bathija explained in his email to creditors:
“Nexo has failed to respond to requests for a comprehensive due diligence exercise on them, including a solvency assessment of Nexo….”
The Vauld CEO added that Nexo subsequently failed to provide safety-net assurances to creditors in the event of its insolvency.
Following the termination of the acquisition deal, Vauld looks to select a fund manager for customer assets. This strategy makes up the company’s proposed restructuring plan.