Distressed Crypto Lender Vauld Obtains Extended Creditor Protection

Asian cryptocurrency lender, Vauld, has been granted a further extension in the period of creditor protection from a Singapore court. As per the court, the company should come up with a revival plan by February 28.

According to a new report, the latest extension was granted in the Singapore High Court for more than a month to close its negotiations with one of two digital-asset fund managers to take over the executive control of the tokens stuck on its platform and come up with a restructuring plan. In an affidavit, Vauld claimed that its discussions with the fund managers are at an advanced stage. Earlier in August, the crypto lender was already allocated a three-month moratorium to provide a solution for its creditors.

Vauld Rejects Nexo Acquisition

Recently, Vauld firmly rejected the acquisition proposal by crypto finance firm Nexo, citing concerns with the company’s financial health. Nexo had expressed initial interest in Vauld soon after the latter had suspended withdrawals on its platform.

Nexo submitted its renewed acquisition proposal to Vauld’s creditors on December 26, 2022. Vauld reiterated that Nexo has failed to provide a viable a “financial model” to prove its ability to fill the $400 million hole in Vauld’s balance sheet, sparking fears that Vauld could get caught up in a second liquidity crisis if Nexo proves insolvent.

Distressed Crypto Lender Vauld Obtains Extended Creditor Protection

The Beginning of the End

This comes on the heels after Vauld had paused all withdrawals, transactions and deposits in July 2022. The Singapore-headquartered crypto lending platform was forced to suspend withdrawals amid financial challenges. It is believed Vauld owes nearly $363 million to retail investors along with a total of $402 million to creditors. In order to navigate through its financial woes, Vauld was also considering reorganisational strategies.

Previously, he company had also laid off around 30% of its workforce amidst plunging cryptocurrency prices including a volatile market condition. At that time, the turmoil in the crypto industry was triggered by the collapse of Terra ecosystem, Celsius network pausing withdrawals and Three Arrows Capital defaulting on their loans. Darshan Bathija, CEO at Vauld said,

“The financial difficulties of our key business partners is inevitably affecting us, and the current market climate, which has led to a significant amount of customer withdrawals in excess of a $197.7 m since June 12, 2022 when the decline of the cryptocurrency market was triggered by the collapse of various factors.”