German crypto bank Nuri with 500,000 user files for insolvency

by · August 10, 2022

Nuri, a German start-up crypto bank with 500,000 customers, filed for insolvency on Tuesday, citing large crypto sales, the insolvency of Celsius and other crypto funds earlier this year as a reason for the move.

The crypto bank said the move will “ensure the safest way forward” for all customers, but also stressed that the insolvency will not affect its services, customer funds, investments or the ability for customers to withdraw their assets from the platform.

Some customers have reported problems withdrawing their assets through Nuri’s mobile app; However, Nuri said on Twitter that this has been a result of high traffic and usage and again stressed that “funds are safe.”

In particular, the firm itself does not handle customers’ fiat and crypto funds due to a partnership with Solarisbank AG. According to the Solaris Group website, Nuri partnered with the bank and its crypto subsidiary Solaris Digital Assets to outsource banking services and crypto custody licensing.

This enabled Nuri to scale its operations and services using Solaris’ banking and crypto asset infrastructure/licensing. Since Solaris is not facing any liquidity problems, Nuri is essentially able to continue its services while the company undergoes restructuring, unlike other firms that have faced the same problems:

“Let us repeat the most important information for you: All funds in your Nuri accounts are safe due to our cooperation with Solarisbank AG. The temporary insolvency proceedings do not affect your deposits, cryptocurrency funds and Nuri Pot investments made with us.”

“You have guaranteed access and will be able to deposit and withdraw all funds freely at any time. For now, nothing will change and Nuri’s app, product and services will continue to run,” Nuri added.

Nuri stated that it has faced a “sustained strain” on its business liquidity in 2022 due to “significant macroeconomic headwinds and cooling of public and private capital markets” such as the COVID-19 pandemic and the Russian invasion of Ukraine.

“Additionally, various negative developments in the crypto markets earlier this year, including large cryptocurrency sell-offs, the implosion of the Luna/Terra protocol, the insolvency of Celsius and other major crypto funds have led to a crypto bear market,” Nuri wrote.

Related: Crypto lending platform Hodlnaut suspends services due to liquidity crisis

Berlin-based Nuri, formerly known as Bitwala, was founded in 2015 and offers crypto savings accounts, portfolio investment baskets called Nuri Pots and crypto trading services that charge a 1% trading fee.

“We are confident that the interim insolvency proceedings provide the best basis for developing a viable long-term restructuring concept in the company’s current situation,” it added.

Nuri joins a number of crypto firms that have encountered liquidity problems during the 2022 bear market, with the most notable names being Voyager Digital, Celsius and Three Arrows Capital.