Hostility Between Two Crypto Rivals Worsens

Hostility Between Two Crypto Rivals Worsens

Tensions between two cryptocurrency-lending rivals have heated up in a simmering conflict. The digital asset market is expected to experience a significant correction. Nexo Capital Inc. accused troubled crypto startup Vauld of not acting in the highest interests of its creditors in an open letter Thursday.

Nexo sought Vauld. It claimed that the corporation rejected its offers and demanded a questionable agreement with an affiliated fund manager. According to the letter, this new arrangement is guaranteed to result in Vauld’s balance sheet depreciating completely via speculation and exorbitant management charges.

Creditors should request an impartial third-party administrator, Nexo recommended. It added that this could help ensure the accuracy of voting and its outcomes. When called for comment, Vauld did not respond right away.

Let’s Look Back at Nexo’s Existing Troubles

The crypto lending industry has suffered another blow with the rivalry between Nexo and Vauld. Celsius Network filed for bankruptcy, Genesis Global Trading Inc. laid off many employees, and Silvergate Capital Corp. lost a substantial amount of money in recent months. Accordingly, rivals Vauld and Nexo have also had to deal with difficulties.

After receiving multiple cease-and-desist orders from regulators over its interest-earning products, Nexo announced last month that it is phasing out its products and services in the United States. Several British investors claim that when the price of Bitcoin rose above $54,000 in March 2021, they were not allowed to withdraw portions of their $126M in Bitcoins from the platform.

What Is the Fault in The Vauld?

Vauld, a Singapore-based company, stopped customer withdrawals in July and hired consultants to look into a reorganization. Vauld’s parent firm, DeFi Payments Ltd., Singapore High Court granted the company a three-month protection from creditors’ legal actions on November 7. Consequently, creditors have until January 20 to approve a restructuring plan presented by the corporation.

Customers will likely regain 13% returns on their investments by Vauld. In 2021, it completed a financing round with Peter Thiel-backed Valar Ventures that raised $25M. The startup also received investment from Coinbase Ventures and Pantera Capital.