Crypto lender Nexo offers to buy the warring rival Vauld

The beleagured cryptocurrency lender Vauld has been thrown a lifeline from major competitor Nexo, as a sign of increasing consolidation in the crypto market.

Nexo said on Tuesday that they had signed a term sheet with Vauld which gave it 60 days of exclusive talks to explore an acquisition of the company with all the equity. If successful, Nexo said it plans to restructure the company and pursue an expansion in Southeast Asia and India.

Vauld on Monday halted operations, saying they were exploring restructuring options due to “financial challenges” caused by a sharp drop in cryptocurrencies. The Singapore-based company is backed by the likes of Coinbase and Silicon Valley billionaire Peter Thiel.

It is the last company that has been caught up in the chaos that has gripped the crypto world lately. Just over the past month, Celsius, another cryptocurrency lender, has taken an indefinite pause on withdrawals citing “extreme market conditions.” Meanwhile, Three Arrows Capital, a crypto hedge fund, applied for bankruptcy protection days after the collapse in liquidation.

Asked how much Nexo was willing to pay for Vauld, co-founder Antoni Trenchev said it was “too early” to talk about a valuation at this stage. However, he added that he was “optimistic” when it came to reaching an agreement.

“We’re starting due diligence,” Nexo’s boss 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?”

Nexo previously gave Celsius a letter of intent with an offer to buy the company, but it said that the company refused the offer.

With no government to turn to, several crypto companies have sought help from their peers in hopes of a rescue package instead.

Sam Bankman-Fried, the billionaire behind the crypto exchange FTX, has become a lender of last resort for the industry. Last week, FTX signed an agreement that gave it the opportunity to buy the crypto loan company BlockFi, while Bankman-Peace’s quantum trading store Alameda Research also extended a credit limit to Voyager Digital, a controversial crypto brokerage house that last week froze all operations.

Trenchev compared the current market situation to the “panic of 1907”, a series of bankrolls triggered by the collapse of high-yield speculative betting.

“I think we are 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,” he said.

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