Singapore court grants three-month moratorium to Vauld

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A Singapore court on August 1, granted a three-month moratorium to cryptocurrency lending start-up Vauld till November 7, 2022. Following demand letters from a few creditors, the judge further gave a deadline of four weeks to the company to explore mechanisms for withdrawal for creditors in need.

All the creditors will get updated financial details on the Coinbase-backed company in another eight weeks, the court said in a virtual hearing.

Vauld was earlier seeking a six-month moratorium from the court to strategise the company’s way out of its ongoing liquidity crunch and possible acquisition by London-based crypto lender Nexo. The lending company is currently in the process of due diligence in a 60-day exploratory period while the court proceedings take place in the background.

As of now, the Vauld’s operations remain halted while it has parallelly stopped withdrawals for customers.

In July, Vauld had said that its parent company Defi Payments currently has assets worth around $330 million and liabilities worth $400 million.

In its application for the moratorium, Vauld had submitted a set of affidavits from both a supporting creditor and Co-founder and CEO Darshan Bathija on July 28. These documents were assessed by Moneycontrol.

 Claiming to be the seventh largest creditor, amongst a total of 20 top creditors, Mathew B Mc Givern in his affidavit mentioned that Vauld owes him a total outstanding debt of over $3.5 million. Across its 20 top creditors, Vauld owes over $124.94 million.

Gained creditors’ support

Out of around 147,000 creditors of Defi Payments that were sent emailed notices, 2,910 had responded as of July 26, 2022. “And among 2,910, approximately 2,280 (approximately 78.3%) indicated that they are in support of the Application and a further 442 (approximately 15.2%) indicated that they do not take a position on the Application. Only 188 (approximately 6.5%) object to the application,” Bathija’s affidavit said.

 Bathija also highlighted that his entity Defi Payments is not a licensed or regulated entity under any legislation, whether in Singapore or elsewhere.

“However, Defi Payments had made an application to the Monetary Authority of Singapore for a Digital Payment Token (DPT) Services license under the Payment Services Act 2019, which would allow Defi Payments to provide cryptocurrency exchange services to residents in Singapore. This is a service that Defi Payments does not currently provide in Singapore. This application remains pending.”