By Christian Kirchner and Caspar Schlenk
The heavily bet German neobank Nuri (formerly Bitwala) gets caught up in the crypto meltdown involving the US company Celsius Network. According to research by Finanz-Scene and Finance Forward, Celsius is the central partner of the so-called “Bitcoin yield account”, which Nuri has been using to attract customers for around a year. Specifically, the Berlin fintech is supervising its investors to generate up to 3% income per year on the Bitcoins held with the account and to pay out in installments weekly. According to our research, the model works in such a way that Nuri passes its customers’ crypto assets through to Celsius Network. The Americans, in turn, lend the Nuri investors’ bitcoins to other investors for interest.
On Monday morning, however, Celsius Network – according to its own statements, the company last managed assets of around 12 billion US dollars distributed among around 1.7 million customers – suspended all repayments to investors. This is done to protect customers, the group said. The obvious assumption is that Celsius simply cannot (any longer) adequately serve the liquidation wishes of customers in a crashing crypto market. Accordingly, Nuri customers with a “Bitcoin earnings account” now have to worry about their money. According to its own statements, the fintech recently had almost 500,000 customers. How many of them use the “Bitcoin earnings account” is still unclear at the moment.
Solarisbank is an account partner and provides the liability umbrella
The Berliners had recently aggressively advertised the product on their homepage (“The time of low interest rates is finally over. Our partnership with Celsius Network gives you access to yield rates that you could not achieve with an old-school bank account”). At the same time, however, the offer also revealed the enormous risks. First, there is no deposit protection. On the other hand, according to the separate risk information for the Bitcoin account, investors are deceived “completely the risk of insolvency of Celsius Network. Sole debtor of the investors’ claims to the agreed income and the repayment of the amount of cryptocurrencies invested is Celsius Network”. And: “Whether or not Celsius Network will be able to serve investors’ claims in the future depends solely on the success of their business activities. In the event of insolvency (e.g. in the event of insolvency) by Celsius Network, the investor will lose all of their investment and any income that has already been earned and not yet paid out.”
In regulatory terms, what Nuri is doing with Celsius corresponds to investment brokerage – with the crypto bank formally acting as a representative of another Berlin fintech, namely Solarisbank. Background: Thanks to its full banking license, Solaris is the actual account partner and also provides the liability umbrella required for investment brokerage. The Nuri customers then conclude their own contractual relationship with the US group Celsius Network for the “Bitcoin earnings account”. Based on this, customers can then transfer their bitcoins to Celsius. Finally, Celsius owes the customer variable interest for the temporary assignment. In addition, the US company must also transfer the cryptocurrencies back if the customer so wishes. But this process is now suspended.
Nuri CEO Kristina Walcker-Mayer says that the first step is to remove the offer from the app and to publish a corresponding warning. More information will follow later in the afternoon.
This is how the crypto neobank Nuri (formerly Bitwala) really stands
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