Yieldstreet, a private market assets platform, has reached a $5 million settlement tied to its troubled series of marine loans. While the agreement helps the company cover a portion of its legal costs, investors are unlikely to recover any of their losses.
The settlement follows years of litigation after borrowers defaulted on $89 million in loans that were meant to be secured by 13 ships. These vessels, used in the scrap metal trade, were intended to serve as collateral. However, Yieldstreet later said it lost track of the ships and accused the borrower of fraud, alleging that assets were concealed to avoid repayment. Despite winning monetary awards in several international jurisdictions, the firm said it was unable to enforce them.
In letters to clients, Yieldstreet admitted that the costs of its recovery efforts exceeded the settlement amount. As a result, financial statements reflecting investor losses will be filed by February. “We recognize this outcome is disappointing,” the company wrote, adding that it pursued every possible avenue in hopes of achieving repayment.
The marine loan saga, which began with deals made in 2018 and 2019, had already damaged Yieldstreet’s reputation and contributed to the collapse of its high-profile partnership with BlackRock in 2020. The company has since moved away from that asset class, saying it no longer offers such deals.
The disappointment comes on the heels of other setbacks for the platform. Just last month, customers were informed that four real estate investments worth $78 million had been completely wiped out. Nearly $300 million in other deals are now on watchlists for potential losses. Against this backdrop, Yieldstreet has undergone leadership changes and shifted its business model, partnering with Wall Street heavyweights like Goldman Sachs and Carlyle Group to distribute private market funds.
In a recent statement, the firm emphasized that it has absorbed significant losses alongside its investors, advancing its own funds during the recovery process in an effort to protect them. Still, many clients remain frustrated. One investor, Arman, who placed $180,000 into the marine loan program in 2019, said he has lost more than 90% of his investment despite receiving a partial payout from a class action settlement.
For Arman, the ordeal turned what was meant to be a six-month investment into a six-year battle. “They are taking $5 million to cover their own expenses, with no regard for investors,” he said, calling the result a bitter disappointment.
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