Media: Vauld crypto-lending platform owes $402 million to creditors

The outstanding debt of the Vauld crypto-lending platform after operations were halted stood at $402 million. Such estimates are contained in documents for a Singapore court, which were obtained by The Block.

$363 million of the amount is due to retail investors. One investor did not receive $34 million, while another three did not receive more than $10 million.

The 20 largest creditors are entitled to recover $125 million.

The publication noted that unsecured creditors, in the event of bankruptcy, stand in line behind secured creditors and creditors with priority claims.

The latter category includes “Counterparty 1” and FTX Trading Ltd, which have greater chances of fully recovering their $35 million and $4.1 million, respectively.

Vauld’s assets on the reporting date amounted to $287.7 million. Co-founder and CEO Darshan Bathija noted that the amount does not include about $70 million held in bank accounts.

Vauld’s problems began with the Terra collapse — the firm held about $28 million in staking UST. The next hit was the overall collapse of the crypto market — Vauld had positions in Bitcoin, Ethereum, MATIC and XRP. The third factor in the loss of financial resilience was defaults by some counterparties, which led to unrecoverable losses of about $1.7 million.

“A number of borrowers who borrowed cryptocurrencies without collateral have collapsed,” the document states.

The fourth reason for insolvency was spending on sponsorship deals with the Formula One team Alfa Romeo and the club АПЛ «Crystal Palace» for $6 million.

The platform opened branches in Singapore, India, the United States, the United Kingdom, Turkey, Lithuania, Ireland and the Seychelles. The failure of the latter led to a loss of $4.5 million in August 2021.

The platform’s team sought a six-month moratorium on proceedings. Under Singapore law, such privilege is automatically granted for 30 days from the filing of the application (which occurred on July 8).

The first hearing on the case will be held on August 1.

In addition to selling the platform, possible options for restructuring include raising venture capital, converting debt into equity, issuing a native token, and developing a revenue-linked repayment plan.

The management announced on July 4 that it was preparing to restructure operations.

On July 5, the crypto-lending platform Nexo began a 60-day due diligence procedure, after which it may confirm its intention to acquire the competitor.

Earlier, Mike Novogratz compared industry participants to a “band of idiots”.

The debt of Three Arrows Capital stood at $3.5 billion.

Previously, Celsius Network reported a hole of $1.2 billion in its balance sheet.

Potential liabilities for Voyager Digital could be between $1 billion and $10 billion.

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