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Crypto lender Nexo looks to bail out Vauld amid financial challenges

Yahoo Finance’s David Hollerith joins the Live show to discuss crypto lender Vauld pausing customer withdrawals amid worsening market conditions.

Video transcript

- Welcome back to Yahoo Finance Live, everyone. Chaos continues in crypto. Crypto lender Vauld paused all withdrawals, trading, and deposits on its platform, and it's exploring now potential restructuring options due to volatile market conditions. And even more than that, it's exploring some other considerations here. Yahoo Finance's David Hollerith has the details on this one. David?

DAVID HOLLERITH: Brad, so yesterday, Vauld, which is based in the Indian and other Asian Pacific markets, crypto lender announced that they would pause withdrawals. And this was after seeing almost $200 million in customer withdrawals since the beginning of-- or, sorry, the middle of June. Now obviously, Vauld is the latest of several crypto companies, particularly lenders, who have had to pause customer-- essentially freeze customer accounts given the worsening market conditions for cryptocurrencies.

But interestingly, as of this morning, Nexo, a larger crypto lender, has come out and said that they have signed a term sheet with Vauld and are now in a sort of a 60 day due diligence period where they're evaluating the company's assets. But they're looking to acquire up to 100% of the company's assets. So that's obviously a great news for customers who would see something like these freezes on their accounts. And we have other troubled lenders like Celsius to look to where obviously, the situation looks much more likely to be headed for bankruptcy. So even though it's never good to see a pause in customer funds or accounts like this, it seems like Vauld might get a bailout.

- David, is this still-- so I understand the Celsius downfall. I get it. I see Vauld this morning. Is this still the tip of the iceberg given the route in crypto?

DAVID HOLLERITH: Yeah, Brian, it's really hard to tell at this point. You know, I think a lot of people, after seeing sort of the bankruptcy filings of Three Arrows Capital, which was not a lender but a crypto hedge fund that was borrowing a lot of money from these institutions in the space, I think after seeing a bankruptcy filing from them, a lot of people were trying to sort of call a bottom. But it's really difficult to call that at this point. Sam Bankman-Fried, last week, he sort of said that there's a lot of troubled companies out there that are sort of maybe lower tier from like the main major crypto banks, for lack of a better word.

So I think that there probably are a lot more troubled companies, and we can't expect a bailout for all of these companies. So I would imagine there's more pain to be had in terms of hearing about these bailouts. But on the other side of the table, I guess, these companies also do, if they are financially-- if they have good assets, they make great merger and acquisitions targets for larger firms that are doing better.

Nexo is a great example. Nexo has about $3.6 billion assets under management currently. And so they look a lot better than what most crypto lenders seem to be doing with their balance sheets right now. So I think that there is sort of an element of both sides of this where there is a lot of pain being felt clearly in crypto markets, but a lot of firms seem to be doing fairly well in this situation, given all things.

- Well, if you find that bottom, David, send us a Slack message. We'll have you back on. David Hollerith, thanks so much.