Following Withdrawals Freeze, Nexo Offers Rival Celsius Assets Buyout

• Celsius rival Nexo has offered to buy the former’s assets following its withdrawal freeze announcement.
• The news shows a growing trend in crypto platforms to absorb rivals’ clients during difficult times.

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Crypto lending platform Nexo has offered to acquire Celsius Network assets after the latter frozen withdrawals on its platform. Just like Celsius and BlockFi, Nexo is a crypto lending platform, meaning the three are in direct competition. 

Celsius announced to its 1.7 million clients that it would be halting withdrawals to fix its “withdrawal obligations.” The DeFi platform, which previously trended due to its high yields, has not specified the timeline for its return to normalcy.

In an offer letter shared on Twitter, Nexo says it would like to purchase “Celsius’’ qualifying, outstanding collateralized loan receivables.” Unlike Celsius, Nexo touts its “strong liquidity and equity position,” saying it can supply “immediate” liquidity to Celsius’ users. 

Nexo wants to acquire Celsius assets

In its letter, Nexo notes that it has offered “assistance” to Celsius before the asset acquisition offer was made. The move, it says, was meant to protect as many clients as possible from the consequences of possible insolvency. The letter was then posted after Celsius failed to respond.

As the leading global provider of crypto-backed credit lines and a digital assets institution whose business now spans an exchange offering and institutional-focused capabilities, among others, we’re uniquely positioned to offer a strong buffer.

Considering the recent happenings around Celsius, it is safe to assume that the company has a liquidity shortage. For instance, its assets are now valued at half ($12 billion) what they were worth in December. $1 billion of this value flowed out of the platform between March and May. 

Like many other crypto firms and projects, Celsius was hit hard by the massive sell-off in the crypto market. The overall market cap of digital assets has fallen from over $3 trillion in November last year to $1 trillion. Bitcoin (BTC) itself now trades below $25K, a price range it last saw in December 2020.

To make matters worse, Celsius has an attractive high-yield program. Its long-term sustainability became a matter of concern – something that seems to be unravelling now.

Crypto projects acquisitions

The events unfolding here bear similarities to those of Terra’s implosion. When the ecosystem fell apart, the likes of Polygon and Binance offered Terra users a better option – to migrate to their networks. Ripple and FTX recently said they are on the hunt for crypto projects to acquire.

Acquiring Celsius clients could be a plus for Nexo, but it could also mean taking up its problems. Its rival BlockFi had to pay $100 million to the US regulators as a penalty for its unregistered offers – the same offer it and Celsius provide. Meanwhile, Coinbase was forced to abandon a similar feature after threats of a crippling lawsuit.

Of note, Nexo’s offer stands until June 20. As of writing time, Celsius Network was yet to respond to the offer by Nexo.