Crypto Lender Vauld Owes $363M to Retail Investors, $34M to 1 Investor

Vauld, a beleaguered crypto lender in Asia who halted withdrawals earlier this month, owes $363 million to retail investors, according to The Block. 

The affidavit filed by Vauld co-founder and CEO, Darshan Bathija, in Singapore, stated the firm owes a total of $402 million to creditors, with $363 million of that owed to individual retail investors. Bathija filed the affidavit on July 8 with the details going to customers via email on July 18. 

The document shows that Vauld owes $125 million to its 20 largest unsecured creditors, with the largest of these debts equalling $34 million. All 20 of these creditors appear to be individuals, except one who is identified as “Party A.” Three creditors in total are owed more than $10 million each. 

Unfortunately for these unsecured creditors, their priority during this insolvency situation ranks relatively low as secured and preferential creditors rank higher. To make matters worse, the Singapore-based Vauld owes two secured creditors $35 million and $4.1 million respectively. 

This revelation comes a little more than a week after Vauld disclosed a shortfall of around $70 million, as their assets worth $330 million fell short of their $400 million worth in liabilities. 

Vauld’s troubles started when the Terra Network’s algorithmic stablecoin, TerraUSD (UST), lost its $1 peg and fell in value at a rapid rate. The once third-largest stablecoin by market cap fell from its peg to mere pennies in the course of several days. Vauld had staked $28 million in UST, according to their affidavit. 

That, in addition to the following market crash, created further losses for the firm. Lastly, several debtors defaulted on their loans, which forced Vauld to make a decision to potentially save their future. 

On July 4, Vauld suspended client withdrawals, an announcement that came just several weeks after other crypto platforms in the industry did the same like Celsius Network and Babel Finance. If Celsius and Babel give any indication for how the Vauld’s coming weeks will go, it’s not looking good. Celsius filed for Chapter 11 bankruptcy in New York last week, after revealing a $1.2 billion hole in their balance sheet. 

Author: Tyler Irvin

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