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Nexo dodges $219M bullet just days before FTX's solvency crisis

9 Nov, 20222 min readOther
Nexo dodges $219M bullet just days before FTX's solvency crisis

According to a post dated Nov. 8 by crypto lender Nexo, the firm stated that it currently has net zero exposure to the ongoing crisis embroiling cryptocurrency exchange FTX and crypto trading firm Alameda Research. Nexo also explained that it withdrew its entire balance of funds from FTX within "the past few days."

Meanwhile, Alex Svanevik, CEO of blockchain analytics platform Nansen, confirmed the story, providing statistics that Nexo withdrew over $219 million from FTX between Nov. 1 and Nov. 8. This also ranks Nexo as the top entity for funds outflow in the past week.

The firm appears to have dodged a major bullet as on Nov. 8, FTX announced that it would halt all non-fiat consumer withdrawals. Continuing with its assessment of the situation, Nexo said that it had a small loan to Alameda Research representing less than 0.5% of its assets. The loan was fully collateralized by digital assets, of which Nexo said were sold on Nov. 6. According to the firm, the trade resulted in "100% principal recovery and $0 losses for the company."

[email protected] has $0 net exposure to FTX/Alameda. As a conservative institution with stringent risk controls @Nexo has safeguarded *all* funds by withdrawing its entire balances from the exchange over the past few days, as evidenced by on-chain data: 1/— Nexo (@Nexo) November 8, 2022

Nexo has thus far sidestepped major industry-wide risk events this year, including the collapse of Terra Luna, hedge fund Three Arrows Capital, and crypto-lender Celsius. According to a real-time audit of the firm's custodied assets, Nexo currently has more than $3.4 billion in consumer liabilities, with a collateralization ratio of more than 100%, making them fully backed by Nexo's assets. The numbers are attested by U.S. accounting firm Armanino LLP, which is an auditor certified by the Public Company Accounting Oversight Board.

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