Vauld discloses shortfall of $70 million in letter to creditors

Troubled crypto lender Vauld in a letter to its creditors has disclosed a shortfall of around $70 million, news website The Block has reported. The letter comes a few days after the platform stopped client withdrawals on July 4.

In the letter, the Singapore-headquartered exchange said it has assets worth around $330 million and liabilities worth about $400 million. However, these figures might not be final as Vauld said it is undergoing forensic and financial audits and the disclosed numbers are to the best of its knowledge.

Also Read: Vauld seeks moratorium for six months, has liabilities worth $400 million

The crypto lender said the main contributing factors for the shortfall are mark-to-market losses on bitcoin, ether, and polygon trades as well as exposure to the collapsed algorithmic stablecoin terraUSD (UST).

The company said if its deal with crypto lender Nexo does not go through, it will be looking at other options like raising more venture capital, explore other alternatives for complete acquisition.

Vauld said on July 5 that it signed an indicative term sheet with crypto lender Nexo which would acquire the cryptocurrency exchange.

Co-founder and CEO Darshan Bhatija tweeted, “I understand that a lot of our customers are nervous about your funds. We are working tirelessly to ensure your financials are protected. To that end, we've signed an indicative term sheet with @Nexo to acquire up to 100% of Vauld.”

Also read: Distressed Vauld likely to be acquired by crypto lender Nexo

The company will also look at converting debt to equity or develop a payment plan for future revenue, the letter said.

Moneycontrol reported on July 11 that Vauld, in an e-mail notification to its retail investors, said its parent organisation Defi Payments has filed for a moratorium for six months that will bar any proceedings or order for winding up operations.

The company said the moratorium is "to prohibit for the period of six months, amongst others, any order or resolution to wind up Defi Payments, and any commencement or continuation of any proceedings against Defi Payments."

"This is so as to give Defi Payments and the Vauld management the breathing space it requires to prepare for the intended restructuring for the benefit of all stakeholders," the company said.

The company had in June laid off 30 percent of its workforce. After the firm paused withdrawals, it triggered panic across the crypto community.