German crypto bank Nuri urges customers to withdraw assets

German crypto bank Nuri has filed for insolvency and is urging its 500,000 customers to withdraw their assets as the company shuts down operations.

According to a release by Nuri CEO Kristina Mayer, customers can withdraw their funds until December 18. Mayer assured their assets would be unaffected, thanks to its partnership with Solarisbank AG. Customers can also still trade on the platform until November 30.

Mayer explained that the “tough economical and political environment of the past months” had prevented the company from raising funds and finding an acquisition partner to save Nuri.

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Despite the solvency, Mayer expressed positive expectations of decentralized financial services.

“We still believe in innovative financial technology and are convinced that blockchain, cryptocurrency and decentralized finance will offer opportunities that add true value to the lives of people,” Mayer wrote.

“Still, financial innovation should be safe, understandable and easy to use for as many people as possible.”

The CEO also cited the bankruptcy of an unnamed partner as a major cause for its business shutdown. Analysts believe the partner to be Celsius, a U.S.-based cryptocurrency lender that declared bankruptcy earlier in July. Nuri partnered with Celcius to offer Bitcoin interest accounts to customers. The accounts, stored on the Celsius platform, were frozen following its bankruptcy.

Earlier this month, a new court filing reported top Celcius executives had withdrawn assets from the platform about a month before freezing customers’ withdrawals. Celsius former CEO Alex Mashinsky alone reportedly pulled out around $10 million in crypto.

Nuri’s insolvency

Nuri filed for insolvency in a Berlin court on August 9, saying that the action was “necessary to ensure the safest path forward for all our customers.” The court filing occurred two months after Nuri had laid off 20 percent of its employees to adapt to the new financial landscape.

During the court proceeding, Nuri guaranteed customer access to crypto wallets and euro accounts because Solaris Digital Assets GmbH (SDA) operated those accounts. Customers can still use the Nuri mobile app. The bank’s debit card is also still usable.

Nuri, formerly named Bitwala, began operating in 2015. The digital banking platform provided traditional banking services along with Bitcoin and Ethereum wallets. Customers could set up savings accounts that would enable them to buy Bitcoin regularly. Its most recent banking service was Nuri Pots, which compiled a number of exchange-traded funds (ETFs).

In 2021, Nuri raised 24 million euros ($24.6 million) through its Series B funding. The company reported having serviced customers across 32 countries last year.

The German company was among several crypto financial services that went bankrupt in this year’s crypto winter. In addition to Celsius, blockchain-based financial services like Three Arrows Capital and Voyager Digital also filed for bankruptcy this year.

This situation creates uncertainty for crypto investors registered with insolvent financial services. Debevoise & Plimpton corporate attorney Elie Worenklein said there was no precedent in the current law to categorize crypto as an asset in the case of bankruptcy.

“Different crypto customers may have different rights against different crypto entities,” the attorney said. “It's not necessarily going to be the same answer for different entities that filed for bankruptcy.”