Crypto Lending Platform Vauld Owes $402 Million To Creditors

The volume of outstanding debt of the crypto lending platform Vauld after the suspension of operations amounted to $402 million. Such estimates are contained in the documents for the Singapore court, which were at the disposal of The Block.

$363 million of this amount comes from retail investors. The company did not return $34 million to one of them and more than $10 million to three more. 

The 20 largest creditors are entitled to demand the return of $125 million.

In the publication, we recall that creditors on unsecured debt in the event of bankruptcy are in line with creditors with a preemptive right to claim and creditors on secured debt. 

The latter category includes “Contractor 1” and FTX Trading Ltd, more likely to fully recover their $35 million and $4.1 million, respectively.

As of the reporting date, Vauld’s assets amounted to $287.7 million. Darshan Batija, co-founder and CEO of the platform, noted that the amount does not include ~$70 million in bank accounts.

Vauld’s problems began with the collapse of Terra – the firm held the equivalent of $28 million in UST staking. The next blow was the general fall of the crypto market – Vauld took positions in Bitcoin, Ethereum, Matic, and XRP. The third factor in the loss of financial stability was the defaults of some counterparties, which led to sunk losses of ~$1.7 million.

“A number of borrowers who borrowed cryptocurrencies without providing collateral have failed,” the document says.

The fourth reason for the bankruptcy was spending on sponsorship agreements with the Formula 1 stable Alfa Romeo and the Premier League club Crystal Palace for $6 million.

The platform has opened offices in Singapore, India, the USA, the UK, Turkey, Lithuania, Ireland, and Seychelles. The latter’s failure led to a loss of $4.5 million in August 2021.

The platform team requested a six-month moratorium on proceedings. According to the laws of Singapore, such a privilege is granted automatically for 30 days from the date of application (this happened on July 8).

The first hearing in the case will take place on August 1.

In addition to selling the platform, restructuring options include raising venture capital, converting debt to equity, issuing your token, and developing a payment plan tied to future income.

Recall that the management announced preparations for restructuring activities on July 4.

On July 5, the Nexo crypto-lending platform began the Due diligence procedure for 60 days, as a result of which it can confirm its intention to take over a competitor.