Between May and July of this year, Nexo experienced a significant drop in deposits on its platform. Given the current context of cascading bankruptcies starting with the freezing of withdrawals, questions arise over the financial health of the cryptocurrency giant. Nexo’s spokesperson wants to be reassuring, as were the representatives of Celsius or Voyager before the big dive. But there is no need to spread the FUD as we are told that all is well in the best of worlds.
One month ago, Link offered to buy Celsius. However, figures released by his California-based accounting firm Armanino indicate that deposits have fallen significantly.
$ 3 billion in withdrawals in 2 months
The liabilities of the company’s customers, the value of the digital assets that users have deposited on the platform, fell to 3.9 billion dollars. As of May 12, there were still $ 6.9 billion worth of real-time certifications provided by the Armanino LLP group auditing firm. The famous Wayback Machine it’s a valuable tool that saves previous versions of websites for posterity (but it’s probably still a little inconvenient for some).
The bear market weakens companies
The decline in customer liabilities (liabilities) corresponds to a drop of about 44%, while the price of bitcoin (BTC) has fallen by about 20% and the price of ether (ETH) by 22%.
Expressed in bitcoin (BTC), customer liabilities fell from 261,111 bitcoin (BTC) to 169,672 bitcoin (BTC), a decline of 35% over the same period.
The cryptocurrency research company, Arcane Researchhas published its own evaluation of Nexo’s data (see graph above): Nexo users are cautious given shaky market conditions and bankruptcies affiliated with other major cryptocurrency lending platforms. “
Nexo reassures its users
Nexo is reassuring and ensures that it is completely normal during this period bear market.
It is true that the collapse in cryptocurrency prices this year has had very serious consequences causing some sort of rush to the counters : the FUD it caused massive withdrawals, layoffs on major exchanges and subsequent bankruptcies. Since the crash of the Earth (Moon), dominoes have fallen one after another: Voyager, Celsius, 2gether, Three Arrows Capital in particular have not withstood the storm and this could be just the beginning of a tsunami that threatens to overwhelm ( almost) everything in its path.
” As you may have read in the Three Arrows Capital revelation, Nexo’s name was not among those on display. “Nexo’s spokesperson said.
Nexo says he has strong shoulders
Nexo claims to lend funds on a strictly oversized basis, a practice that provides protection in the event of a borrower’s insolvency. Nexo’s spokesperson stressed that ” at any time, Nexo’s assets under management exceed its obligations, which means we are stable and able to provide clients with their funds at any time. “
Nexo has hired the banking giant Citigroup to advise it on the acquisitions of risky platforms. This demonstrates, at least potentially, its absorption capacity.
The potential acquisitions of NEXO
Nexo announced an offer last month to purchase assets from Celsius. This offer was formalized in a letter sent by a named entity Nexo AG in Zug, Switzerland. At the time, however, executives told CoinDesk that Nexo’s operations were based in Sofia, Bulgaria. According to the spokesperson, the company is headquartered in London. we get lost a little …
Nexo had also offered to acquire Vault, a struggling cryptocurrency lending platform backed by Peter Thiel and Coinbase Ventures. The platform has stopped withdrawals, cut jobs and is looking to restructure. Vauld sought protection from his creditors in Singapore.
” Nexo has a large chest for such transactions and does not use client funds in any way for such business. “
Nexo looks solid despite a significant drop in customer deposits and therefore a drop in revenues. The nexo token (NEXO) has lost 80% this year and is currently trading at 70 cents. Customer debt as of July 27, 2022 exceeds $ 3.8 billion and Nexo’s business exceeds customer debt. The future will tell if Nexo is like the reed, which bends in the storm without breaking.
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Subprime, financial crises, runaway inflation, tax havens … Bitcoin was designed for greater transparency and perhaps to finally change the game. I try to understand this new environment and try to explain it myself. The road is undoubtedly long, but it is worth it.