Crypto lender Nexo announced Tuesday that it has signed a term sheet to acquire fellow lender Vauld for an undisclosed sum. While Nexo currently manages assets for about four million users, Vauld manages assets for about 100,000 people, according to the company’s estimates last year.
Vauld halted withdrawals Monday after customers pulled out about $197.7 million, according to the lender. Nexo said in an announcement that it is purchasing the lender in order to help it restructure and stabilize the industry overall, and will ease withdrawal limitations as soon as possible. It has 60 days to perform due diligence before completing the sale.
“The current market conditions are to a large degree reminiscent of the Bank Panic of 1907, characterized by excessive leverage in the system, an overabundance of companies in trouble, and no lender of last resort,” Nexo’s statement said. “Today, it is again in the hands of a few capable and well-capitalized entities to come up with systemic solutions and aid the sector.”
Vauld is one of many crypto lenders to halt withdrawals as tanking token prices and defaults have created a liquidity crisis in recent weeks. The near-collapse of several entities affected, like major crypto lender Celsius and hedge fund Three Arrows Capital, have made it clear how interconnected the DeFi world is. Both were heavily dependent on the UST stablecoin, which continues to create knock-on effects after its collapse in May.
Nexo is positioning itself as an industry knight in shining armor, devoting capital to acquiring a struggling lender that, if it collapsed, could spread the crypto sector's contagion. Nexo said last month that it was also interested in purchasing assets from Celsius, though Celsius informally rejected the offer and hasn’t publicly replied to a formal offer.
FTX’s Sam Bankman-Fried is mounting a rescue operation on a grander scale. The billionaire solidified an acquisition of BlockFi and an investment in Voyager last month.
Depending on who you talk to, these types of acquisitions are either a charitable endeavor to save the industry or opportunistic “vulture capital.” But either way, they mark an inherently centralizing period of consolidation for so-called decentralized finance.