Arrington-Backed Startup Launches Crypto-for-Cash Credit Platform

A crypto lending startup backed by TechCrunch founder Michael Arrington launched a U.S. dollar credit platform on Monday.

AccessTimeIconApr 30, 2018 at 2:00 p.m. UTC
Updated Sep 13, 2021 at 7:53 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Cryptocurrency startup Nexo, which is backed by TechCrunch founder Michael Arrington, has launched a cash-based lending platform.

Announced Monday, Nexo provides loans or extends a line of credit using its own assets, said managing partner Antoni Trenchev.

To that end, the startup raised $50 million from investors, which will be used to provide liquidity to the company's platform. This departs from existing crypto-backed lending solutions, which instead connect borrowers with other individuals willing to loan out their funds.

This structure allows Nexo to provide instant loans without requiring credit checks or the time delay that manual approval processes require, Trenchev said.

The startup, which was spun off from European fintech firm Credissimo, is using blockchain security firm BitGo's digital wallet as its custodian, Trenchev told CoinDesk. Further, the company is now looking to team up with a small Federal Deposit Insurance Corporation bank to store assets.

He added:

"All of the software, all of the automation process is something we have developed ourselves, and most of the tools, we have used them for several years. All of our software and automation process are [used by Credissimo]. … We have developed our own models of insuring and protecting our business."

Notably, the company is backed and advised by TechCrunch founder Michael Arrington, who told CoinDesk that he is one of the startup's financial backers.

Nexo is acting similarly to a bank with its lending model, according to Arrington.

"I haven't seen anyone do a good job so far of providing liquidity for people who have cryptocurrencies without forcing them to sell the cryptocurrency, or to put it more succinctly, provide a proper credit line to people who own cryptocurrencies," he said.

Trenchev said Nexo wants to set a precedent for traditional financial institutions, namely banks, and prove that cryptocurrencies can be trusted as an asset.

"If you look at the trend with cryptocurrencies, volatility is going down, it’s still very volatile ... [but] we are pretty confident that volatility is on a downward trend and will continue to do so, which will make our model even more robust than it is," he said.

Ultimately, Trenchev concluded, Nexo's benefit comes from the fact that it lets clients "spend the value of [their] crypto without having to sell it."

Bitcoin and dollars image via Shutterstock

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.