Nexo offers to buy struggling rival Vauld amid the market consolidation

Сrypto lender Nexo has signed a term sheet with Vauld to explore an all-equity acquisition of the company. Nexo said it plans to restructure the company and pursue an expansion in Southeast Asia and India. Before, Vauld paused operations and said it was exploring restructuring options due to “financial challenges.”

Struggling crypto lender Vauld has received a lifeline from larger competitor Nexo, signaling of growing consolidation in the crypto market.

On July 5, Nexo revealed it had signed a term sheet with Vauld giving it 60 days of exclusive talks to explore an all-equity acquisition of the company. If successful, Nexo plans to restructure the company and pursue an expansion in Southeast Asia and India.

On Monday, Vauld paused operations and said it was exploring restructuring options due to “financial challenges” posed by a sharp plunge in cryptocurrencies. The Singapore-based company is backed by the likes of Coinbase and billionaire Peter Thiel.

Lately, chaos is gripping the crypto sector. In the last month, Celsius, another crypto lender, put an indefinite pause on withdrawals citing “extreme market conditions,” while Three Arrows Capital, a crypto hedge fund, applied for bankruptcy protection days after collapsing into liquidation.

Nexo co-founder Antoni Trenchev said he is “optimistic” about reaching a deal, adding that it’s “premature” to speak about Vauld’s valuation at this stage.

“We are starting the due diligence,” Trenchev told CNBC. “We have a 60-day window of exclusivity where they will open up the books. You will see everything. Is there a hole? How big is the hole? Where are the assets? Who are the counterparties?”

Previously, Nexo gave Celsius a letter of intent offering to buy the company, however, it said the company refused its offer.

With no government to turn to, several crypto firms have sought the help of their peers in hopes of a bailout instead.

For example, Sam Bankman-Fried, the billionaire and owner of crypto exchange FTX, has become a lender of last resort for the industry.

Last week, Bankman-Fried signed a deal giving FTX the option to buy crypto lending firm BlockFi, while his quant trading shop Alameda Research also extended a credit line to Voyager Digital, a struggling crypto brokerage that last week froze its operations.

Nexo’s chief compared the current situation in the crypto market to the “panic of 1907,” a series of bank runs that preceded the establishment of the Federal Reserve in 1913. Without a central bank to depend on at the time, the remaining lenders that survived the crash were rescued by top financiers, such as JP Morgan.

“I do think we’re going to see a period of consolidation and mergers and acquisitions. And it will end up with fewer companies, but stronger ones with better business practices,” Trenchev said.

In June, Bitcoin saw its worst month on record, losing more than 38% of its value. The world’s largest cryptocurrency is down more than 50% since the start of 2022.