Vauld Discloses A $70M Shortfall In A Letter To Creditors

Crypto lender Vauld has issued a letter to its creditors revealing that the firm has suffered a shortfall of around $70 million and adding that it has assets worth around $330 million and liabilities worth about $400 million.

In the letter shared with The Block on Monday, Vauld stated that it is currently undergoing forensic and financial audits and hence, the figures mentioned above are not exact but are to the best of its knowledge.

The firm added in the letter that the reason it ended up in this situation is due to the market-to-market losses it suffered on Bitcoin (BTC), Ether (ETH), and Polygon (MATIC). Market-to-market losses are those which are experienced when a firm or investor holds an asset purchased at a certain price and then the price of the asset drops, leading to unrealized losses.

Another major reason for the lender's shortfall is its exposure to UST-LUNA which got reduced to ashes in May, taking down crypto lender Celsius and crypto hedge firm 3AC with it.

"We also have a mismatch of tenure where we have committed a significant proportion of our AUM [assets under management] toward loans with a tenure of another 3-11 months that can't be recalled early," Vauld said.

The Singapore-based crypto lender recently stopped withdrawals stating reasons ranging from the current bearish market to the Celsius liquidity crunch in a corporate statement. The firm confirmed that it had taken the services of Kroll Pte Limited as its financial partner and will explore "potential restructuring options."

"We intend to apply to the Singapore courts for a moratorium i.e. a suspension of the commencement or continuation of any proceedings against the relevant companies so as to give us breathing space to carry out the proposed restructuring exercise," said CEO Darshan Bathija.