In an exclusive interview with CryptoSlate, Nexo's co-founder Antoni Trenchev addressed the company's strategic expansion of its insurance fund to $775 million, its initiative to provide liquidity to struggling crypto firms, and his perspective on recent allegations questioning Nexo's stability.
Trenchev explained that the decision to bolster insurance coverage was part of a continuous, proactive strategy to enhance security, entirely separate from recent market volatility. He emphasized that all client assets are held with third-party custodians and are "fully insured" against potential losses. To date, Nexo has never needed to activate any of its insurance policies, underscoring its robust risk management framework.
Furthermore, Trenchev confirmed that all lending activities are "strictly overcollateralized," positioning Nexo as "the most security-focused lender in the cryptocurrency space." Responding to baseless rumors suggesting Nexo might also be facing solvency issues, he pointed to the company's transparent partnerships with leading custodians as proof that "they are confident everything is as it should be."
The Nexo co-founder dismissed the recent negative chatter as nothing more than a coordinated "smear campaign." He asserted that Nexo is in a position of significant strength compared to many other players in the industry.
"Several well-known companies in the space are clearly nearing insolvency, and community confidence is shaken. In stark contrast, Nexo continues to operate seamlessly and even possesses substantial liquidity to offer assistance to these distressed firms—we aim to bring institutional quality and protect their adversely affected clients and investors."
When questioned about the status of Nexo's offer to acquire assets from a struggling competitor, Trenchev confirmed that "Nexo has been approached for several ongoing processes to assist with liquidity provision." He reiterated that Nexo is "committed to being part of the solution" to strengthen the reputation of the digital asset lending sector.
A recent statement from the struggling firm mentioned it was exploring "strategic transactions" to resolve its liquidity challenges. Neither party has officially confirmed or denied ongoing negotiations.
Disclosure: Nexo is an official partner of CryptoSlate.
Nexo has significantly increased its insurance coverage to over $775 million. What prompted this move?
This wasn't a reaction to any single event. Rather, it's the culmination of a long-term, proactive strategy to continuously enhance our security and other protective measures. This process has been months in the making through our partnerships with industry-leading custodians like BitGo, Anchorage, Fireblocks, and Bakkt, which has now come to fruition.
How does the insurance work, and under what specific circumstances would a client receive a payout?
The insurance covers all custodial assets held on the Nexo platform. Our custodians implement a critical security measure by creating segregated wallets for each client, a strategy designed to prevent a single breach from impacting multiple users. This means that if anything were to happen to assets under the care of our third-party custodians, Nexo and its clients would be fully protected.
Has Nexo ever had to rely on this insurance policy to cover client funds?
Given Nexo's impeccable track record in security and risk management, we have never experienced a hack or lost client assets. Consequently, we have never had to utilize our insurance coverage.
Does this substantial insurance coverage provide Nexo with a competitive advantage in the crypto lending market?
While insurance is becoming more common in the blockchain industry, Nexo boasts one of the highest coverage levels on custodial assets, clearly differentiating us from competitors. This, combined with our foundational practices like strictly collateralized loans, third-party real-time attestations of our reserves, prudent risk management, and proactive global licensing, has earned us the reputation of the most security-focused lender in crypto.
How can you reassure skeptical users who believe such insurance is merely a marketing gimmick and would never actually pay out?
A public partnership is a substantial endorsement. For leading institutions like BitGo, Fireblocks, Bakkt, and Anchorage—names that speak for themselves—to publicly collaborate with Nexo means they have conducted thorough due diligence on our operations and are confident in our integrity. Beyond these custodians, Nexo also partners with global giants like Mastercard and Fidelity. These are not organizations that would allow their names to be used lightly.
Do you believe there is a targeted campaign against Nexo right now? If so, do you have any thoughts on who might be behind it and why?
It certainly appears that way. We find it difficult to characterize the recent noise in the space as anything other than a smear campaign. There's little value in speculating about who might be behind it. Rather than engaging in fruitless Twitter wars—which frankly, this situation does not deserve—our team is focused on providing the stability our industry desperately needs right now. Moreover, we're leveraging this market downturn wisely, focusing on continuous product development and active hiring while others are downsizing.
Several well-known companies are on the brink of insolvency, and community trust is fractured. In stark contrast, Nexo operates normally and has the liquidity power to help these companies—we are committed to injecting institutional-grade quality and protecting their affected clients. Nexo is working with top-tier advisors from traditional finance and is positioned to be a key player in the impending consolidation of the crypto market.
Can you provide any update on your offer to assist a struggling firm, reportedly Celsius?
There are several ongoing processes where Nexo has been approached to provide liquidity to entities facing solvency challenges, but we cannot comment on specifics at this time. We remain, however, committed to being part of the solution that will lead to a consolidation of the space and the restoration of best practices in digital asset lending.
Antoni Trenchev is the co-founder and managing partner of Nexo, a leading digital asset institution best known for providing the world's first instant crypto credit lines.
