Vauld Extends Nexo Buyout Due Diligence Period

In an update on the progress of the intended acquisition of Vauld by London-based crypto lending platform Nexo, Vauld says the 60-day exclusivity period previously agreed with Nexo to conduct due diligence in relation to the potential acquisition has been extended for a period of a further 30 days from today.

According a Vauld spokesperson, discussions with Nexo "remain ongoing" and Vauld’s management team is working closely with Nexo. As a result, more time is required for the due diligence process.

Vauld’s $75M Shortfall

After an August Singapore court hearing, Vauld released an update to creditors regarding its financial position – revealing a $75 million shortfall – but says the company would be solvent again if the Bitcoin price was to reach $55,000.

To some extent the news was reassuring to investors whose funds are locked in Vauld’s wallets, as the Bitcoin price traded above $55,000 for over six weeks in 2021.

As part of its presentation to the Court, Vauld founder Darshan Bathija provided an affidavit as to the valuation of his company’s assets & liabilities – and forecasts of its profitability and cash flow.

Vauld Assets & Liabilities as at August 1st 2022

Bathija said that based on these numbers and assuming no changes to any of its assets or liabilities, "it can be broadly estimated that Defi Payments (Vauld’s legal name) would break even when BTC increases to the price of approximately USD55,124.60/token, which is about a 136% increase in price from its 1 August 2022 price of USD23,314.20/token."

Singapore Courts Grant Vauld Creditor Protection

Vauld applied for a moratorium in the Singapore courts on Friday July 8th, under section 64 of Singapore’s Insolvency, Restructuring and Dissolution Act 2018.

The application for a moratorium (HC/OA 318/2022) was heard on August 1st. More than 75% of Vauld’s creditors were in favor of the moratorium and the Court granted the application until the 7th of November 2022.

The moratorium will protect Defi Payments Pte Ltd from its creditors, as while it is in place, no order to wind the company up can be issued and nobody can bring any proceeding against the company.

During any moratorium Vauld says it will be working on a restructuring plan and assisting lending giant Nexo in conducting due diligence in regards to a potential buy-out of the failed lender.

In an earlier email to clients, Vauld blamed its failure and the suspension of customer withdrawals on;

• Mark to market losses on BTC, ETH, and MATIC trades and exposure to the failed UST US dollar stablecoin.

• The repayment time frames of some of its lending “we have committed a significant proportion of our AUM towards loans with a tenure of another 3-11 months that can’t be recalled early.”

The company says its court filing should not be viewed as a first step to “winding up or shutting down the company” and that its top priority currently is “to complete the due diligence process with Nexo.” If the Nexo purchase does not go ahead, Vauld says it is also considering a range of backup options including

• Raising more venture capital
• Exploring alternatives to a complete acquisition
• Waiting for some of our deployed capital to be returned
• The possibility of converting debt to equity
• Issuing its own token
• Developing a payment plan tied to future revenue

As at the 9th of September, Vauld is continuing to advise depositers and affiliates of new weekly interest and commission payments being credited to their accounts.