Nexo says it’s nothing like Celsius and other cryptocurrency lenders. Here’s what the data shows

The continuing liquidity problems of cryptocurrency lenders BlockFi, Celsius and Voyager Digital have put other cryptocurrency lenders in the hot seat, with some scrambling to assure customers that their funds are safe.

But Nexo, pointing to its certificates in real time by the accountant Armanino as proof that he did not follow the path of his competitors, he also had to do with a Twitter user who claims that his co-founder Kosta Kantchev stole funds from a charity to build “a building the size of a high school.

In response to these claims, the company printed a rebuttal who dismissed the allegations as a case of misidentification, writing that the account used “lies and distortions in yet another smear campaign against Nexo.”

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The company’s legal department was also involved when it saw a cease and desist from the letter to the person who manages the Twitter account.

“He claims many things, but that we are unsolvable. he’s not one of them, ”Trenchev said. Decoder. “It is a prediction that we will be unsolvable by the end of the year and they have not supported that significantly.” (Disclosure: Nexo is one of 22 investors in Decoder.)

Trenchev said Nexo doesn’t appear to be like its cryptocurrency lending competitors, who typically consume client funds and invest them in yield-generating protocols or do what it considers secured loan. Nexo is fundamentally different, Trenchev says, and hasn’t resorted to any of the same measures to stay afloat.

These measures include freezing or limiting withdrawals, such as Celsius, or seeking a revolving credit line, such as BlockFi. Voyager had to do both.

Like its competitors, Nexo lends funds to its clients and uses the proceeds to pay interest. blockchain The Nansen analytics platform has identified more than 500,000 of them wallets as belonging to Nexo.

This includes one that Nansen identifies as Nexo cash for business. It sold $ 169 million on Tuesday morning. Most of the funds, $ 104 million, were in Staked Ethereum (or stETH)– that is, ETH that was blocked on Ethereum 2.0 lighthouse chain through the service provider Lido.

A Nansen dashboard depicting some of the largest cryptocurrency lender Nexo’s wallets. 1 credit

Another of business portfolios included in Nansen’s dashboard showed that Nexo had deposited $ 579 million worth of wrapped bitcoins (wBTC) as a guarantee in a ManufacturerDAO secure and had an outstanding balance of $ 50 million ILLUMINATED.

All this to say that a significant portion of the capital sitting in Nexo wallets is held in the form of ETH, stable coinsor have lent to protocols that require excessive loan collateral.

Unlike its competitors, Nexo claims to only make secured loans. This means it tends to pay lower returns than BlockFi and Celsius, but exposes customers to “a priori no risk“, According to its website.

Trenchev said Nexo did not use investor funding to fulfill its obligations to its customers, another detail that he believes sets it apart from other cryptocurrency lenders.

“We invested when times were good for space,” Trenchev said. “During this period, I think it took 18 months, we worked with Armanino, who is one of the top 20 auditors in the United States, to develop real-time attestation that our assets have activated our liabilities of over 100% “.

The firm has also partnered with several investment banks, including Citigroup, to explore acquisition opportunities for troubled companies.

“Basically it’s up to us to do our best to help clean up the space in some sort of consolidation effort,” Trenchev said.

Lately, it has often been the case that when a large player in a cryptocurrency category falls, their pairs are scrutinized simply because they appear to have similar assets.

It happened to stablecoins after TerraUSD (UST) lost its anchor and went to zero. Circle’s Tether (USDT) and US Dollar Coin (USDC) were quick to draw a line in the sand to separate their stablecoins, which would be backed by an equivalent US dollar reserve, from Terra’s algorithmic coin, which was not originally supported. from nothing to everything, then a mix of other cryptocurrencies, including Bitcoin.

Case in point: Tron’s USDD algorithmic stablecoin, which founder Justin Sun said is safer than UST because it is oversized, no longer has its 1: 1 peg to the US dollar since June 12. On Monday afternoon, it was trading at $ 0.98, second CoinMarketCap.

After the fall of the Earth, it cuts itself to way of its investors, venture capitalists, to tell if they were exhibiting. Over the course of a few weeks, revelations came Mike Novogratz, CEO of Galaxy Digital, Capital wordingI, Multi-currency capital and other.

The problem that Nexo faces, trying to distinguish itself from other cryptocurrency lenders, is what Armanino has decided to solve with its TrustExplorer product.

The company is able to check the sales of its customers’ bank accounts and crypto wallets on a daily basis, compare them to its debts or money it owes its customers, and improve the health of Ready’s business. The idea is that transparency allows companies to avoid what happened to Celsius, as Armanino partner Noah Buxton said Decoder there was a discrepancy between assets and liabilities and a maturity problem, all of these things.

He said this is the problem that the team behind TrustExplorer, which started as a reserve verification tool in support of stablecoins, has focused on adapting it for lenders. In fact, it was Nexo who pushed them to do so in 2021.

“[Lenders] have notes with counterparties. They have assets listed on global exchanges, they also have some exposure to DeFi, “Buxton said.” So we’re looking at a number of things on the asset side, probably, honestly, 50 different sources of assets that we attract, but then this liability is the two “.

While Armanino claims can differentiate Nexo from other lenders and reassure watchers of the cryptocurrency market, it is important to note that claims are not the same as audit choices. And given the current state of the market, it’s not hard to understand the growing skepticism in the crypto loan market as a whole, including Nexo.

This skepticism is not lost on Nexo or its accounting firm. “Nobody trusts anyone, even if you show the proof in their face,” Buxton said.

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