While numerous crypto platforms are falling down one by one, another crypto lender Vauld has written a letter to its creditors about a $70 million shortfall in its platform.
In a letter, Vauld stated that it is currently holding up around $330 million worth of digital assets withstanding $400 million in liabilities. However, the crypto lender stated that these figures could vary as the platform is currently undergoing forensic and financial audits.
Vauld has described factors that caused the shortfall. The reasons behind the shortfall are market-to-market losses on bitcoin, ether, and Polygon traders and a downfall in the algorithmic stablecoin terraUSD (UST).
“We also have a mismatch of tenure where we have committed a significant proportion of our AUM [assets under management] towards loans with a tenure of another 3-11 months that can’t be recalled early,” Vauld said.
Vauld halted the withdrawal on July 4 and the very next day, its London-based competitor Nexo signed a term sheet with the firm for a potential acquisition.
The crypto lender has also ensured those customers, who are dubious about the Nexo deal. Vauld revealed in the letter that they have other plans if the deal doesn’t complete.
According to Vauld, these plans are fetching more venture capital by exploring alternatives to a complete acquisition, waiting for some of its deployed capital to be returned, converting debt to equity, issuing its own token, and developing a payment plan tied to future revenue.
The letter also unveiled that after suspending withdrawals, its Singapore-based DeFi Payment Pte Ltd filed for a moratorium on July 8 in the Singapore Courts according to section 64 of the Insolvency, Restructuring and Dissolution Act 2018.
The reason behind the submission of the moratorium was a shortfall and if it passes, Vauld will buy 30 days time to explore its option. However, Vauld is very optimistic about the Nexo Deal.