Vauld Has Disclosed A Shortfall Of $70M In A Letter To Creditors

Troubled crypto lender Vauld has issued a letter to its creditors and disclosed an overall shortfall of around $70 million. A significant proportion of AUM towards loans with a tenure of another 3-11 months that can’t be recalled early.

Vauld’s shortfall was due to market losses

After halting client withdrawals last week, troubled crypto lender has issued a letter to its creditors and disclosed an overall shortfall of around $70 million.

According The Block, on July 11, Vauld said it has assets worth around $330 million and liabilities worth about $400 million. But these figures might not be final because Vauld said it is currently undergoing forensic and financial audits and the disclosed numbers are to the best of its knowledge.

As for how Vauld landed up in this situation, the firm said the main contributing factors for the shortfall are mark-to-market losses on bitcoin (BTC), ether (ETH) and Polygon (MATIC) trades as well as exposure to the collapsed algorithmic stablecoin terraUSD (UST). Mark-to-market losses are losses generated through an accounting entry rather than the actual sale of a security.

“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

Nexo signed a term sheet with the firm for a potential acquisition. Nexo is currently undergoing a due diligence process and Vauld customers’ funds remain stuck.

Some customers of this company remain skeptical of the Nexo deal. In the creditors’ letter, this company said if the deal doesn’t go through, it has several other plans to make customers whole. In the meanwhile, Vauld remains “very optimistic” that the Nexo deal will go through.

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