What is the story about?
What's Happening?
Yieldstreet, a private market assets platform, has informed its investors to expect losses from a series of marine loans totaling $89 million. The loans, backed by ships intended for scrap metal, have defaulted, leading to a settlement of $5 million with the borrowers. Despite the settlement, Yieldstreet has indicated that the recovery costs exceed the settlement amount, making it unlikely for investors to receive repayment. The company has pursued legal action against the borrowers, accusing them of fraud and asset concealment, but has faced challenges in recovering funds.
Why It's Important?
This development is crucial as it underscores the risks associated with investing in private market assets, particularly in niche sectors like marine loans. The losses could impact investor confidence in Yieldstreet and similar platforms, potentially affecting their ability to attract future investments. The situation also highlights the importance of due diligence and risk management in investment strategies. The fallout from these losses may influence the company's business model and partnerships, as seen with the previous collapse of its partnership with BlackRock.
What's Next?
Yieldstreet plans to file financial statements showing the losses by February and has announced changes to its business model, focusing more on distributing private market funds from established Wall Street firms. Investors and industry observers will be watching how Yieldstreet navigates this situation and whether it can restore confidence and mitigate further losses. The company's future strategies and partnerships will be critical in determining its recovery and growth.
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