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

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 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, has also partnered with blockchain security firm BitGo, which acts as its custodian, Trenchev told CoinDesk.

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.

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

CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.