Reuters reported on August 9 that the crypto exchange Nuri GmbH has filed for insolvency with a Berlin court. The company stated the sell-off in the cryptocurrency market, the collapse of Terra, the insolvency of Celsius and other funds, and the uncertainty of the financial markets drove it to make the decision.
Ensuring the Safest Path for Customers
In the statement, Nuri admits that it has been facing a “lasting strain” on its business liquidity in 2022 due to “significant macroeconomic headwinds and the cooling down of public and private capital markets.”
The crypto bank said the move will “ensure the safest path forward” for all its customers, but also stressed that the insolvency will not affect its services, customer funds, investments, or the ability for customers to withdraw their assets from the platform.
“Additionally, various negative developments in the crypto markets earlier this year, including major cryptocurrency sell-offs, the implosion of the Luna/Terra protocol, the insolvency of Celsius and other major Crypto funds have led to a crypto bear market,” Nuri wrote.
Funds Are Safe, Claims the Company
Although some users of Nuri’s mobile app have reported having trouble withdrawing their payments, Nuri on Twitter said that this was due to heavy traffic and usage and emphasized once more that “funds are safe.”
Due to a collaboration with Solarisbank AG, the company does not really handle the fiat and cryptocurrency funds of its customers.
The bank and its cryptocurrency business, Solaris Digital Assets, teamed up with Nuri, according to the Solaris Group website, to outsource banking and cryptocurrency custody licenses.
Nuri can virtually continue to provide its services and go through restructuring because the Solaris company has no liquidity difficulties, ensures the company.
Bear Market Forces Companies into Liquidity Issues
With Voyager Digital, Celsius, and Three Arrows Capital among the most noteworthy names, Nuri joins a long list of cryptocurrency companies that have experienced liquidity problems during the bear market of 2022.
CeFi skeptics attribute the current crisis of crypto firms to the core of CeFi, the centralization. Trusting centralized providers to be a gateway to decentralized finance presents a risk that the company might fail to pay off debt, even if they initially promised higher yields.
On the Flipside
Despite having liquidity issues, Celsius, another bankrupt cryptocurrency firm, has been able to repay a sizable chunk of its debt.
Why You Should Care
Nuri, a German start-up crypto bank, serves 500,000 customers.
More about Celsius bankruptcy:
Celsius Network Files for Bankruptcy Protection, Leading to a 50% Loss for CEL
More about Celsius rising from the dead:
Celsius (CEL) Rises 300% Following Bankruptcy Due to Twitter Short Squeeze