Nuri, a German start-up cryptocurrency bank with 500,000 clients filed for insolvency on August 9, citing massive crypto sell-offs, insolvency of Celsius, and other cryptocurrency funds earlier in 2022 as a reason for the move.
The crypto bank noted that the move will ‘guarantee the safest path forward’ for all its clients, but also insisted that the insolvency will not impact its services, investments, client funds, and the ability for customers to withdraw their assets from the platform.
Nuri filed for insolvency on Tuesday, August 9th, 2022. This does not affect our services, customer funds or investments. You can find a complete statement of this situation on the Nuri Blog: https://t.co/UgAyckWE7J
— Nuri (@NuriBanking) August 9, 2022
Nuri said that it has been encountering a ‘lasting strain’ on its business liquidity in 2022 because of “significant macroeconomic headwinds and the cooling down of public and private capital markets.”
Some clients have reported challenges withdrawing their assets via Nuri’s mobile application. Nonetheless, Nuri said on Twitter that this has been the result of high traffic and usage, and stressed that “funds are safe.”
Interestingly, the company itself does not handle client’s fiat and crypto funds due to a partnership with Solarisbank AG. Based on the Solaris Group official website, Nuri partnered with the bank together with its cryptocurrency subsidiary Solaris Digital Assets to essentially outsource banking and crypto custody licensing.
That enabled Nuri to scale its operations and services by using Solaris’ banking and cryptocurrency asset infrastructure/licensing. With Solaris not facing any liquidity challenges, Nuri is fundamentally able to continue with its services while the firm undergoes restructuring, unlike other companies that have run into the same issues.
“Let us reiterate the most important information for you: All funds in your Nuri accounts are safe due to our partnership with Solarisbank AG. The temporary insolvency proceedings do not affect your deposits, cryptocurrency funds and Nuri Pot investments which have been done with us.”
“You have guaranteed access and will be able to deposit and withdraw all funds freely at any time. For the time being, nothing will change and Nuri’s app, product, and services will continue to run.”
Nuri insisted that it has been encountering a “lasting strain” on its business liquidity in 2022 because of “significant macroeconomic headwinds and the cooling down of public and private capital markets” including the Russian invasion of Ukraine and the global pandemic.
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“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 was formerly known as Bitwala. The Berlin-based bank was launched in 2015 and it offers portfolio investment baskets dubbed “Nuri Pots”, crypto savings accounts, and crypto trading services which it mostly charges 1% trading fees on. It added:
“We are confident that the temporary insolvency proceedings offer the best basis for developing a viable long-term restructuring concept in the company’s current situation.”
For now, Nuri joins several crypto companies that have encountered lots of liquidity problems during the bear market of 2022, with the most notable names being Celsius, Voyager Digital, and Three Arrows Capital.