- Vauld has revealed a $70 million shortfall on its balance sheet
- The company says exposure to Terra and other losses have impacted it
- Nexo continues to do due diligence on Vauld prior to a potential buyout
Lending platform Vauld has revealed a $70 million shortfall in its balance sheet. Vauld halted customer withdrawals last week as it became the latest casualty of the crypto contagion outbreak, with its exposure to collapsed crypto hedge fund Three Arrows Capital a major contributing factor. In a letter to creditors, Vauld revealed assets totalling $330 million and liabilities totalling $400 million, leaving a $70 million that the company could fill with a sale to Nexo, which is currently conducting due diligence on the Singapore-based lender.
Vauld Lays Out Road to Ruin
Vauld announced it was halting customer withdrawals last Monday, 10 days after laying off 30% of its workforce, saying it needed time to overcome “financial challenges”. These challenges have been laid bare with a letter to creditors which outlines the situation – Vault had $70 million more in liabilities than assets. However, the letter added that because Vauld is currently undergoing forensic and financial audits, the final figure could be higher.
The letter also explained how Vauld got into this mess – exposure to the Terra crash and Three Arrows Capital, as well as mark-to-market losses on BTC, ETH and MATIC, which are losses generated through accounting entries rather than the sale of an asset itself.
Vauld added that a “mismatch of tenure” regarding a “significant proportion” of its assets under management means that loans locked in for another 3-11 months was also causing a liquidity problem.
Nexo Mulling Over Takeover Bid
Vauld said that it is looking at various ways out of its financial hole, such as raising more venture capital, exploring alternatives to a complete acquisition and waiting for some of its deployed capital to be returned. It may also go down the Coinflex route and convert some debt to equity or issue its own token.
An acquisition by fellow lending platform Nexo remains the most straightforward way of Vauld digging itself out of trouble. Nexo is currently working on due diligence on Vauld after indicating a desire to take over the Singapore-based company, a deal that would see the $70 million hole plugged and investors made whole.
It remains to be seen whether, in the event of such a deal, Vauld would remain as a company in its own right or it would be subsumed into the Nexo brand.
