As you are certainly aware by now, a liquidity crunch at FTX has caused extreme volatility in the crypto markets.
In light of the recent conversation about liquidity struggles, we thought it would be helpful to clarify how Nexo's business differs from that of others. We want to assure you that we have no exposure to FTX/Alameda or any other failed crypto firms and your digital assets are safe and secure at Nexo. The robustness of our business model and our infrastructure ensures that all Nexo services are running without disruption and precisely as intended.
Protecting customers and growing the crypto economy in a responsible way has been our mission since 2018. The prudent practices we have committed to as an institution have cemented our position as a trusted partner and our impeccable track record shows that we have successfully navigated through every critical period for the digital assets industry – the 2018 crypto winter, the 2020 Covid-19 crisis, the May 2021 crypto crash, and the series of unfortunate events of this year.
We hold ourselves to the highest standards and encourage others to do the same. The principles we stand for, including prudent risk management, insurance on custodial assets, and lending on an over-collateralized basis only – are non-negotiable and our track record and the numbers speak for themselves:
- $0 Exposure to Failed Institutions
Our risk management protocols have ensured that our exposure to FTX/ Alameda and many other embattled crypto firms is $0. We safeguarded all funds by withdrawing our entire balances from the FTX exchange, as evidenced by on-chain data. We also liquidated a small loan to Alameda (<0.5% оf our assets), resulting in 100% principal recovery and $0 losses for Nexo.
- 100%, Fully-backed Reserves
Our reserves are verified in real time by a very reputable, independent third party – PCAOB-certified auditor and leading US accounting firm Armanino LLP. We pioneered this real-time attestation of Nexo’s custodial assets back in 2021 to show that assets exceed customer liabilities at all times. We have always pushed for this to become an industry standard and we will keep on raising the bar here.
We have refused to engage in the industry-wide practice of under- and un-collateralized lending. Our conservative approach has time and again paid off and has resulted in Nexo’s stability during market turmoils.
- $0 Lent to Failed Institutions
Nexo had no exposure to UST/Luna, Three Arrows Capital, Celsius, Babel, Hodlnaut, struggling crypto miners, etc. Because risk management is fundamental and we adhere to our principles.
- The NEXO Token Represents Less than 10% of Assets
While we strongly believe in our native asset, the NEXO Token makes up less than 10% of our group’s assets and we have never borrowed using it as collateral, as we share the view of Binance’s CEO Changpeng Zhao.
- Numerous Licenses and Registrations Globally
Nexo holds dozens of licenses from jurisdictions all over the world. To secure those, Nexo has passed rigorous scrutiny with regards to its security procedures, financial reporting, and risk management policies.
Since launching in 2018, Nexo has been consistently investing in its enterprise-grade security infrastructure. The result is 0 breaches and the fact that no client funds or company holdings have ever been compromised or exposed to vulnerabilities, whether economic or technical.
Nexo has a comprehensive network of custody partners and insurance providers, such as Ledger Vault and Bakkt, among others. Collectively, they carry insurance protections on custodial assets via the most prestigious underwriters, including Lloyd’s of London, and Marsh and Arch.
- Sustainable Business Model
Rather than relying on VC support, we fund ourselves through retained earnings and capitalizing on our innovative financial products. To this day, Nexo is 100% founder-owned which evidences the sustainability of its operations.
- A Growing Team, Despite Industry Lay-offs
We have tripled our headcount over the past year and we are still hiring. Working through thick and thin, our team transforms challenging times into an opportunity to create value for the entire ecosystem.
We at Nexo remain extremely optimistic about the future of the blockchain industry. We are laser-focused on protecting and growing your assets. We will continue to tirelessly work on being your trusted party on which you can rely, regardless of the market conditions.
As always, we will continue to innovate the products and services that you, our valued clients, need in order to achieve your financial goals in the most safe and efficient way possible. We will also relentlessly push for higher standards across the industry and act as stewards of your financial well-being.
This industry is made up of many brilliant people and companies like Nexo that make prudent decisions while pushing the boundaries of digital finance innovation with a clear market vision. This is what really matters for Nexo at the end of the day – the longevity of our business and the satisfaction of our customers. This is where we and our clients’ paths intersect – we are in for the long run and we will keep on raising the bar to the benefit of everyone.