Wednesday, October 5, 2022

Vauld Writes to its Investors, Discloses $70M Deficit

In more than a week since it suspended withdrawals, Vauld in a letter to its creditors has disclosed a deficit of $70 million.

According to reports from The Block, Vauld said it is worth about $330 million in assets and about $400 million in liabilities. But these estimates are not conclusive for the crypto lender as an audit process is still in progress.

Why Vauld is Facing Liquidity Crisis?

Speaking on how it entered the murky waters of liquidity crisis, the Singaporean firm blamed it on its exposure to the fallen Terra USD.

Furthermore, shortages from its mark to market losses trades on Bitcoin (BTC), Ethereum (ETH), and Polygon (MATIC) also contributed to its losses.

The firm also committed a reasonable amount of its assets under management towards loans with lengthy tenure. Vauld said it could not recall the loans and this resulted in a mismatch of tenure.

Recall that the Singaporean crypto-lender, according to a statement from its CEO Darshan Bathija suspended withdrawal more than a week ago. Bathija cited the bearish market run and troubles of some of its partners as reasons for the firm’s financial woes.

Shortly after it suspended withdrawals, rival firm Nexo signed an indicative term sheet that includes a possibility to acquire Vauld. The London-based crypto lender is currently carrying out its due diligence while Vauld’s investor’s funds remain stuck.

Depending on the result of its exploration period, Nexo will either refinance or restructure Vauld.

Vauld hopes the deal with Nexo will be successful. It could consider a number of options to make investors whole should the deal not be completed.

These options range from raising more funds from venture capital firms to exploring alternatives to complete the acquisition. It could also wait for some of its committed capital to reach maturity or convert its equity debt. 

Another alternative is issuing its token and developing a payment plan tied to future revenue. The troubled crypto lender enjoys backing from several high-profile investors including Coinbase Ventures and Valar Ventures.

With the Nexo deal yet to be completed, trapped Investors’ funds still hang in the balance.

Joyce Onose
A Blockchain enthusiast and growing writer in the space with an understanding of the importance in creating quality content for readers in the industry. Also, keen on using her skills in improving Blockchain journalism.

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