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Vauld Crypto Lender Discloses $70 Million Shortfall, Hopeful of a Takeover Deal with Nexo


btcmanager.com 12 July 2022 16:00, UTC
Reading time: ~3 m

Vauld has disclosed a shortfall of $70 million to its creditors. The centralized crypto lending platform says it still holds $300 million worth of assets and liabilities worth roughly $400 million. A takeover deal by Nexo is in the pipeline, according to reports on July 12, 2022.

Vauld’s $70 Million Deficit 

Vauld, a Singapore-based blockchain-focused company that enables its customers to lend, borrow, and trade bitcoin (BTC) and altcoins, while also earning interests on their idle crypto assets, has disclosed a $70  million shortfall to its creditors.

Per sources close to the matter, the 4-year-old crypto lender made it clear via a letter to its creditors that the value of its assets stands at $330 million, while its liabilities are currently worth $400 million. 

The firm also stated that it has also used a significant part of its assets under management (AUM) as collateral for some loans it obtained, which have a tenure of 3-11 months. Darshan Bathija, Vauld co-founder  wrote:

“We also have a mismatch of tenure where we have committed a significant proportion of our assets under management (AUM) towards loans with a tenure of another 3-11 months that can’t be recalled early.”

Acquisition Deal with Nexo 

Vauld has partly attributed the $70 million shortfalls to its mark-to-market (MTM) losses on its bitcoin (BTC), ether (ETH), and polygon (MATIC) trades, as well as its exposure to the Terra USD (UST) algorithmic stablecoin. 

For the uninitiated, mark-to-market (MTM) losses occur when the value of a financial instrument is measured based on the current market condition rather than its value when initially purchased. 

As reported by crypto.news on July 4, 2022, Vauld halted all funds deposits, withdrawals, and crypto trading activities on its platform. At the time, the firm stated that the current gloomy crypto markets outlook has made it difficult for it to continue normal operations and has hired both legal and financial experts to advise it on the way forward.

On July 5, reports emerged that Nexo, a London-based crypto lending that has remained quite strong during this one-of-a-kind bear market, is looking to acquire Vauld and both firms have signed an indicative term sheet to execute the deal.

“I understand that a lot of our customers are nervous about their funds. We are working tirelessly to ensure your finances are protected. To that end, we’ve signed an indicative term sheet with @Nexo to acquire up to 100 percent of Vauld,” tweeted Bathija at the time.

While Bathija has expressed his optimism over the success of the acquisition deal, he’s also made it clear that Vauld would explore other options of reimbursing its customers if the takeover bid by Nexo fails, including launching its own token, raising more funds from VC firms and more.

With the price of bitcoin (BTC) showing no signs of recovering from its free fall, the future of some industry players remains quite bleak. At the time of writing, the price of BTC is hovering around $19,850.

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