We would like to thank all creditors who participated in our recent AMA dt 5-Jan-23.

For those who could not make it, please find the recording of the event here, you may also find our presentation during the event here.

Q&As as of 5-Jan-23

1. Vauld Group Financial Position

2. Restructuring Process

3. Nexo

4. Fund Management (Restructuring Plan - Vauld Creditors Fund)

5. INR Balances

6. Committee of Creditors

7. Next Steps and Timelines

1. Vauld Group Financial Position:

1.1 What is the present financial situation of the Vauld Group?

The following is the updated financial position of Defi Payments as of 14 December 2022:

Overall, in the period from 1 August 2022 when we last provided an update of the financial position of the Company, the net deficit or ‘gap’ has increased from USD81m to USD98m. This is largely due to the following reasons:

  • Differential – this refers materially to the impact of the negative price movement in the crypto currency market. Due to the asset liability mismatch, which is majority tokens in terms of the composition of the assets and a combination of tokens and stablecoins in terms of the liability position, the decrease in asset value relative to the relative decrease in claims amount has contributed USD8.1m to the increase in the asset deficit

  • Net loss to FTX – due to the bankruptcy proceedings relating to FTX, the asset has been impaired and reduced assets by a net amount of USD8.8m

1.2 What is the current status of our funds both INR and Crypto (are they safe / secure, where are they stored)?


Stored in cold wallets which are in our custody. This includes all the tokens / coins we are able to withdraw from counterparties.


Remains frozen in the bank accounts in India.

1.3 Will Defi Payments allow a full entire historical audit of Vauld financial records to an independent, third party forensic accountant?

Defi Payments is required to conduct a statutory audit and we are fully committed to releasing audited accounts when available.

1.4 Who is referred to as Secured Creditor and Unsecured Creditors under Liabilities?

The Unsecured Creditors are Defi Payment’s customers while The Secured Creditor is Counterparty A.

1.5 Who is referred to as Third Party Receivables and Interco Receivables under Assets?

  1. Third Party Receivables are due from Counterparty A and CoinLoan

  2. Interco Receivables are due from Flipvolt Technologies.

1.6 What is the status of the loan receivable from Counterparty A?

The loan to Counterparty A will mature in June 2023 subject to counterparty risks and any potential disputes that may arise.

1.7 What is the status of the loan receivable from CoinLoan?

We are pursuing legal actions to facilitate a quicker recovery compared to the current daily withdrawal limit set by CoinLoan.

2. Restructuring Process

2.1 What is the purpose of the restructuring?

To maximize recoveries to creditors within the constraints of Defi Payments’ liquidity profile and asset-liability mismatch. We will do this while ensuring that the risks associated with the target recoveries does not materially compromise creditors’ interests. It is also noted that an early liquidity opportunity is sought by creditors who are willing to exit early (subject to a discount). All creditors of DeFi Payments will be treated fairly and ensure that there is no preferential treatment based on the quantum of claim, geographic location or other criteria.

2.2 How are the restructuring options evaluated?

  • Maximized recoveries to creditors – DeFi Payments aims for as high as possible recoveries to creditors

  • Realistic assessment and mitigation of risk – DeFi Payments aims to protect creditors from identified risks able to be mitigated

  • Availability of early liquidity – DeFi Payments aims for creditors to have an avenue to be able to access funds as soon as possible

  • Subject to passing a vote of creditors – DeFi Payments aims to implement a Restructuring Plan that will treat Vauld customers fairly

2.3 Will there be an open voting on Fund Manager options, Nexo deal, etc.?

Common misconception is that creditors will be able to vote on either the fund manager option, Nexo deal or managed wind-down. In the restructuring proposal, the Company will present the best option and creditors can only vote “yes” or “no”

2.4 How will the restructuring be carried out? How will the voting process be conducted?

a) DeFi Payments will present one Restructuring Plan to the Court in the form of an Explanatory Statement

  • The Restructuring Plan will NOT present a range of options

  • The Restructuring Plan must be viable, must produce a better outcome for creditors than under a liquidation, and be able to pass a vote of creditors at the Scheme meeting

  • The Restructuring Plan must satisfy the Court that it is generally workable and feasible

b) DeFi Payments will provide an Explanatory Statement to all creditors, it will include a detailed explanation of all aspects of the Restructuring Plan so that creditors are able to make an informed decision

c) DeFi Payments will organize a Scheme meeting for creditors to vote on the Restructuring Plan. A successful Scheme vote requires:

  • 50% of creditors by number; and

  • 75% or more of claims by value.

d) The Court will hold a hearing to sanction the Scheme

e) The Scheme only takes effect when a successful Scheme vote is achieved and Court sanction is obtained

2.5 What is the process overview of the Restructuring Process to date?

Overview of Updates in the Restructuring Process:


  • On 8 July 2022, Defi Payments made an application to the Singapore Courts to obtain the Moratorium.

  • Defi Payments was granted the Moratorium on 1 August 2022 until 7 November 2022 which was subsequently extended to 20 January 2023.

  • Further extension on the Moratorium is being sought to advance the restructuring with an affidavit (filed 9 January 2023) in support of the extension and hearing date set for 17 January 2023. A copy of the affidavit will soon be made available to all creditors.

Exploring options for restructuring

  • Potential Nexo Acquisition: Progressed discussions with Nexo over the past 6 months in relation to a proposed acquisition however the talks have not come to fruition

  • Vauld Creditors’ Fund: Advanced in parallel with Nexo talks to identify suitably qualified crypto asset fund managers with productive talks ongoing and preliminary terms established. Segregated assets (not commingled with fund managers’ existing funds) held for the benefit of Vauld’s creditors, with pre-agreed risk profile to achieve pre-agreed target returns built into the investment mandate together with an advisory committee including Vauld creditors. In-kind distribution of assets and ‘fresh start’ with appropriately licensed fund manager to provide additional assurance of a high standard of oversight and governance.

2.6 What is the estimated recovery under the contemplated Restructuring Plan?

Under the contemplated Restructuring Proposal (i.e. establishing a Vauld Creditors’ Fund run by a fund manager), recoveries are expected to range from 58% to 100%. This range of recovery is superior to that under a liquidation at a range of 16% to 29%.

2.7 Will there be a difference in treatment for stablecoin credit versus credit with other coins within this debt restructuring?

No. All creditors are treated equally.

2.8 Please allow partial withdrawal:

Partial withdrawal will be made available (subject to a discount) via a mechanism currently envisaged to be a Reverse Dutch Auction (“RDA”) under the proposed Vauld Creditors Fund.

2.9 When will the RDA process take place?

The RDA (or possible alternate early liquidity event) is expected to take place immediately upon the implementation of the contemplated Scheme, which requires a successful vote of creditors and sanction by the Court. We are targeting the implementation of the contemplated Scheme around mid- 2023.

2.10 Will our investments be returned in the form of INR or Crypto?

Under a restructuring of DeFi Payments, your claims will remain in-kind and not subject to any form of conversion. If you are owed BTC, your recoveries will be repaid in BTC. INR claims are claims against Flipvolt Technologies and do not fall under the restructuring of DeFi Payments. Presently we envisage that INR claims will be fully paid out of the asset balances of Flipvolt Technologies subject to the successful implementation of a DeFi Payments’ restructuring.

2.11 Could a significant upturn in the markets mean that Vauld's position turns positive? If the price of BTC increases to $30,000 or $40,000, would this remove the need to liquidate/restructure?

Given the mismatch in asset – liability composition and the current liquidity timeline on the Third Party and Interco Receivables, a significant upturn in the markets may serve to reduce or extinguish the asset-liability deficit but would not remove the need for a restructuring which will still be required to align asset liquidity profiles with timing of redemptions.

2.12 Will there be an exit option within the 3 years after agreeing to the Restructuring Plan (Vauld Creditors Fund)?

Yes, as set out in slide 30 of the AMA presentation, the indicative terms which we are discussing with the fund managers include a 25% distribution of assets (principal and returns) per year at the end of Years 1 and 2, with the remaining balance at the end of Year 3, this is subject to finally agreed parameters of terms.

2.13 Why is a Moratorium extension required?

An extension of the existing moratorium will be required considering the time that is needed:

  • to progress discussions with potential fund managers to enter into binding terms;

  • to formalize the Restructuring Proposal;

  • to allow for Court processes such as to adhere to statutory timelines in allowing creditors sufficient time to evaluate the Scheme document; and

  • considering the number of Scheme creditors, to plan for and run a suitably appropriate voting process.

To approve a Moratorium extension, the Court will require progress on the Restructuring and evidence of creditor support. Without an extension of the Moratorium, the remaining option will be Liquidation.

2.14 What happens if the moratorium extension is not granted?

Defi Payments will not be protected from legal claims (including claims from creditors who may commence winding-up / liquidation proceedings).

2.15 Why are we still earning a yield on some assets?

We have not put a freeze / halt of interest accrual on our platform. Therefore, while it may appear that you are still earning yield on some of your account balances, the contemplated position on the Restructuring Plan involves capturing only interest accrued up to the freezing of customer activities on 4 July 2022. This point will be addressed in the Scheme documents.

3. Nexo

3.1 Can you please address Nexo's allegations Vauld was deliberately delaying the process amongst other allegations raised in the letter? Please share the timelines of discussions with Nexo.

Please refer to slides 9 – 11 of the AMA presentation for a timeline of discussions with Nexo.

3.2 Why not Nexo (based on Nexo’s Final Proposal)? What are the pros and cons?

Please refer to slides 12 – 16 of the AMA presentation for the pros and cons of Nexo’s Final Proposal.

3.3 Will the Nexo Final Proposal secure the necessary creditor votes (i.e. more than 50% by number of creditors AND at least 75% by value of claims)?

The Final Nexo Proposal is unlikely to pass a vote of the creditors due to remaining significant limiting factors as follows:

  • Treatment of US-based customers (~45% by value of claims): Our interpretation of the Final Proposal, which we have invited Nexo to clarify, is that U.S.-based customers appear to be subject to being offboarded by Nexo due to regulatory restrictions. Therefore, U.S.-based customers may lose access to future ‘allocations’ of Defi Payments’ assets i.e. an unfair treatment.

  • Nexo solvency assessment: Nexo has not agreed to financial due diligence or solvency assessment, where in recent developments, authorities in the U.S. have called Nexo solvency into question. While Nexo has reverted to us to address the concern by offering the real-time attestation agreed upon procedures by Armanino LLP to substantive its solvency, the Emergency Cease and Desist order brought against Nexo by the Kentucky Department of Financial Institution (“KDFI”) sets out material shortcomings (e.g. failure to identify doubtful loan accounts and failure to identify liquidity of Nexo’s assets) in Armanino LLP’s attestation.

3.4 Has a split approach (i.e. allowing US customers to go for a fund manager option, and non-US customers for the Nexo option) been considered?

A split approach is not viable due to the minimum Assets Under Management required by the fund managers to effectively run the fund. Without the U.S.-based customers which make up 45% of claims value, the quantum of available AUM will fall under the minimum amount required to set up a fund.

4. Fund Management (Restructuring Plan - Vauld Creditors Fund)

4.1 Why is Vauld proposing a Vauld Creditors’ Fund?

  • Allows the maximization of target returns via active management by an experienced fund manager with an established track record. This allows creditors to recover as much funds as possible.

  • Allows significant mitigation of risk via the fund mandate determined by DeFi Payments which will allow control and oversight of investment strategy, risk vs target returns, ongoing reporting via audits, and segregation of funds via a ‘fund of one’. This protects creditors from unknown risks and ensures that assets are being transparently managed.

  • Allows flexible early liquidity opportunities via the fund mandate and debt tender offer. This allows creditors to exit early with some discount, or stay for the restructuring with periodic access to withdrawals.

  • Allows creditor claims to remain in-kind as tokens, and be paid out as tokens. This protects creditors from tax implications and ensures creditors across multiple jurisdictions are treated equally and fairly.

  • Ensures the implementation of an appropriate level of governance and oversight to institutional standards. Each of the potential fund managers is suitably licensed, threshold requirements will be met for financial reporting and governance, including to conduct regular audits.

4.2 What is the Proposed structure of a Vauld Creditors’ Fund?

Here is the currently contemplated process of setting up and operating the Vauld Creditors’ Fund:

  • A new fund entity is incorporated (“FundCo”) with DeFi Payments being the 100% shareholder

  • DeFi Payments to agree mandate for the management of FundCo’s assets with the Fund Manager

  • Once agreed, DeFi Payments to transfer the crypto assets to FundCo with the Fund Manager managing these crypto assets strictly as defined in the detailed mandate

  • Returns and redemptions to be in-kind and will be transferred from FundCo to DeFi Payments for distribution to creditors.

4.3 What are the indicative terms of the contemplated Restructuring Plan (Vauld Creditor’s Fund)?

Discussions are ongoing with fund managers with the following indicative terms:



Fund Structure

• A ‘Fund of One’, with Defi Payments as the sole Limited Partner.

Capital Contributions

• All assets of Defi Payments, including illiquid assets.

• A maximum of USD30 million of assets reserved to facilitate a debt tender offer by Reverse Dutch Auction (“RDA”).

Fund Term

• 3 years

Distribution of Returns

• Distributions of principal and returns will be made in-kind.

• 25% distribution at the end of Year 1 and 2 with bullet payment of remaining assets at the end of Year 3 subject to maintaining minimum required scale.


Management Fee: 1.5% of AUM calculated at the end of each quarterly period.

Incentive Fee: 20% p.a. of the annual returns of the Fund benchmarked against an index including BTC, ETH and stablecoins subject to a high-water mark.

4.4 What is the role of a fund manager in Restructuring?

A fund manager manages financial assets to achieve investment gains – the shortlisted potential fund managers have an established track record in investing in crypto assets.

A fund manager will not take ownership of assets under management – DeFi Payments retains ownership of FundCo including the assets of FundCo.

DeFi Payments sets the terms that govern the investment mandate – including investment strategy, target returns, risk weighting and redemption profile with ongoing oversight.

Vauld will activate withdrawals function to facilitate distribution – you will continue to see the balance of your account in the Vauld app and withdraw funds subject to release by the fund manager as defined in the mandate.

Likely key indicative terms of the Vauld Creditors’ Fund mandate:

  • All returns and redemptions to be made in-kind to avoid tax implications for individuals

  • Periodic redemptions to provide liquidity for Vauld customers over time

  • Returns targeted to 100% redemption within 3 years subject to risk assessment and timeline of asset recoveries

4.5 How are we evaluating the fund managers and have we shortlisted any?

We looked into the profiles of six potential fund managers, who were reputable subject matter experts in managing digital assets, from Singapore, Australia, USA and the UK. At a COC meeting on 14 December 2022, we presented the four potential fund manager proposals received . Following the initial shortlist of four potential fund managers, we further shortlisted two potential candidates, who already have made initial presentations to the COC as well as an informal group comprising a number of top unsecured creditors by value. Based on these discussions, we expanded our outreach to two further potential fund managers. We are currently working with these four candidates, in consultation with Kroll, the COC and some of our creditors, to develop a strategy which will hopefully be finalized as terms.

4.6 Can we expect 100% of our money back if we opt for the Fund Manager option?

The target recovery under the Restructuring Plan (Vauld Creditor’s Fund) is 100% where Counterparty A receivables are assumed to be recovered.

4.7 How is the Fund Manager option better than Liquidation? How early can the funds be accessed? What are the possible recoveries?

Comparison of possible recoveries:

Following is a comparison of the estimated recoveries under the Restructuring Proposal as compared to liquidation:




Restructuring Proposal – Vauld Creditors’ Fund






The Restructuring Proposal provides superior outcomes to liquidation, subject to:

  • Successful Debt Tender Offer by RDA

  • Funds under management subject to active investment strategies

  • Y-o-Y fund performance of 11%

  • Recovery (Base Case) / Non-recovery (Low Case) of receivables from Counterparty A

Early Access to Funds:

Following is a comparison of the potential availability of funds to creditors under these scenarios:.






Restructuring Proposal – Vauld Creditors’ Fund










The Restructuring Proposal provides earlier access to funds than under a Liquidation scenario.

4.8 How will the returns be allocated among Vauld creditors?

Customer token balances are to be crystallized (i.e. the value will be fixed / pegged) as at the date of suspension of customer account activities on 4 July 2022. The distribution of returns will be allocated on a pro-rata and in-kind basis of each creditor’s claim.

4.9 If I own 10 BTC, 10 XRP, 10 USDC as of July 4, 2022, after the 3-year Restructuring Plan assuming 100% recovery, what do I get? Do I get 10 BTC, 10 XRP, & 10 USDC back regardless of the fiat value?

Yes, you will receive 10 BTC, 10 XRP, & 10 USDC regardless of the fiat value.

4.10 What are the target year-over-year gains the fund manager has to achieve to achieve a 100% recovery for creditors?

11% year-over-year as set out in slide 31 of the AMA presentation subject to: (i) full recovery of loan receivable from Counterparty A, (ii) successful RDA at 70% discount, with 25% distribution of the funds per year at the end of Year 1 and 2 and the remaining 50% at the end of Year 3

5. INR Balances

5.1 Do creditors holding crypto have the same priority with creditors holding INR balance in respect to withdrawals?

INR claims are claims against Flipvolt Technologies and do not fall under the restructuring of DeFi Payments. Presently we envisage that INR claims will be fully paid out of the asset balances of Flipvolt Technologies subject to the successful implementation of a DeFi Payments restructuring.

5.2 Will the RDA be available for creditors with INR balance (i.e. Flipvolt creditors)?

No, the RDA (or alternate early liquidity event) would only be available for creditors of Defi Payments.

5.3 Please provide us with an update on the ED ban and when can we receive our INR?

The enforcement directorate (“ED”) has put a freeze order on some of our capital. We are in the process of resolving this matter with the ED. We have a hearing sometime in January 2023. We expect that this process will take some time to resolve.

5.4 Will our investments be returned in the form of INR or Crypto?

Your claims against Defi Payments are currently contemplated to remain in-kind (i.e. coins or tokens) and not subject to any form of conversion. For example, if you are owed BTC, your recoveries would be repaid in BTC.

INR claims are against Flipvolt Technologies and do not fall under the restructuring of Defi Payments. Presently we envisage that as a gesture of goodwill, INR claims are currently contemplated to be fully paid out of the asset balances of Flipvolt Technologies subject to the successful implementation of a Defi Payments restructuring.

6. Committee of Creditors:

6.1 What was the process for choosing members of the COC? Did any of the people chosen have any level of connection to anyone within the Vauld business?

  • Vauld sent a questionnaire to creditors asking for their interest

  • In the form, creditors were asked to declare certain key information such as whether they are / had been employed by Vauld or had any business relations with Vauld

  • Any creditors who were connected to Vauld were excluded from the COC selection process

  • We also consider that the COC should be selected from different jurisdictions and from varying quantum of claims

  • The above was disclosed in the 7th Affidavit

6.2 Why did the COC make a suggestion to withdraw from the Nexo discussion?

The COC indicated that further discussions with the Nexo proposal should not be entered into unless certain threshold questions including the treatment of US-based customers and questions of Nexo solvency could be satisfactorily addressed. As the only alternative to a failed scheme vote is a liquidation, the COC was acting in the best interest of the general body of creditors in holding this position in favor of an alternate viable plan.

7. Next Steps and Timelines:

7.1 What are the next steps?

Restructuring Proposal:

Vauld, together with Kroll as their advisors will consult further with the COC regarding options and if the fund manager option is preferred:

  • progress discussions with potential fund managers to enter into a binding term sheet with the selected candidate;

  • formalize the Restructuring Proposal into a Scheme document (Explanatory Statement) and disseminate this document to all creditors;

  • hold a Scheme Meeting for the purposes of creditor voting on the Scheme; and

  • obtain Court sanction of the Scheme before implementation.


An extension of the existing moratorium will be required considering the time that is needed:

  • to progress options in the restructuring;

  • to formalize the Restructuring Proposal;

  • to allow for Court processes such as to adhere to statutory timelines in allowing creditors sufficient time to evaluate the Scheme document; and

  • considering the number of Scheme creditors, to plan for and run a suitably appropriate voting process.

To approve a Moratorium extension, the Court will require progress on the Restructuring and evidence of creditor support. Without an extension of the Moratorium, the remaining option will be Liquidation.

7.2 Do we have timelines for the next steps associated?

Set out below is an estimated timeline for the next steps in the proposed restructuring as set out in Darshan’s 8th Affidavit dated 9 January 2023:



17 January 2023

Tentative hearing date for Moratorium Extension

20 January 2023

End of current Moratorium

Mid-February 2023

Target finalization of term sheet with fund manager

March 2023

Finalized Explanatory Statement

April 2023

Defi Payments to apply to Court for leave to convene a meeting of creditors

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