Crypto Lending Startup Vauld Files For 6-Month Moratorium, Has Liabilities Worth $400 Mn

Crypto lending platform Vauld has filed for a six-month moratorium period to prepare for the intended restructuring of the company.

In a statement, Vauld also said that the moratorium was sought “to prohibit for the period of 6 months, amongst others, any order or resolution to wind up Defi Payments, and any commencement or continuation of any proceedings against Defi Payments”.

Defi Payments is the parent company of the beleaguered Singapore-based startup.

“This (moratorium) 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”, said Vauld.

In an email sent to its retail investors, Vauld said that the moratorium is generally granted for 30 days, adding that the company may seek a longer duration.

In the email seen by Inc42, Vauld CEO Darshan Bathija specifically noted that it was not winding up operations but ‘formalising a restructuring strategy’.

Why The Moratorium?

Bathija told investors that the company had a mismatch of assets and liabilities. Bathija blamed the gap on the piling losses suffered by the startup owing to the exposure to the TerraUSD crash as well as a slump in other major cryptocurrencies such as Bitcoin and Ethereum. 

Vauld also went into moratorium owing to what it called a ‘mismatch of tenure’. The startup claimed to have committed a significant proportion of its assets under management towards loans with a tenure of another three to eleven months and which could not be recalled early.

In total, it claimed to have assets worth nearly $330 Mn in its kitty, against a current liability of $400 Mn.

Bathija also said that the startup was in discussions with Nexo to explore potential restructuring options, primarily acquisition. 

“At this time, the Vauld Group continues to have discussions with Nexo Inc whilst Nexo Inc carries out its due diligence, and also explores potential restructuring options that would best protect the interests of the Vauld Group’s stakeholders,” Vauld said in the statement.

In the email, the company also charted out a parallel trajectory for its investors if the Nexo deal falls through.

“While we’re very optimistic about joining forces with Nexo, on the off chance that we can’t make it work our plan will include a combination of – raising more venture capital, exploring alternatives to a complete acquisition, wait for some of our deployed capital to be returned, possibility of converting debt to equity, issuing our own token and/or developing a payment plan tied to future revenue,” said Vauld CEO. 

This comes on the same day as Bathija was quoted as saying that the users of the crypto lending platform would continue to earn interest on their fixed crypto deposits. 

Earlier last month, the company laid off 30% of its workforce and subsequently, in July, suspended withdrawals, trading and deposits on its platform.