Yieldstreet’s Costly Marine Loan Saga Ends With Little Relief for Investors

Private market investment platform Yieldstreet has reached a $5 million settlement to recover part of its legal expenses tied to a failed series of marine loans. However, the company’s investors, who collectively poured tens of millions into the troubled deals, are unlikely to see any return.

According to letters sent to clients and obtained by CNBC, Yieldstreet disclosed that while it secured a settlement with the borrowers who defaulted on the loans, the recovery costs far exceed the settlement amount. As a result, the company said it’s “unlikely investors will receive any repayment.” Financial statements detailing the losses are expected to be finalized by February.

“We recognize this outcome is disappointing,” the company wrote in its investor communication. “Yieldstreet pursued every possible avenue for recovery, reaffirming our commitment to protecting investor interests.”

The marine loans in question amounted to roughly $89 million, secured by 13 vessels that were supposed to serve as collateral. These loans were made to businesses engaged in dismantling ships for scrap metal. However, Yieldstreet lost track of the vessels, later accusing the borrowers of fraud in a lawsuit. While the platform obtained monetary awards in several foreign jurisdictions, the borrowers reportedly evaded payment by concealing their assets.

The scandal, which attracted significant media attention, dealt a serious blow to Yieldstreet’s reputation and contributed to the collapse of its high-profile partnership with BlackRock in 2020.

The latest financial setback follows another troubling report: investors recently lost their entire holdings in four real estate deals worth $78 million, with an additional $300 million in other projects currently at risk.

In response to these mounting losses, Yieldstreet has restructured its business strategy. Earlier this year, the company appointed a new CEO and shifted its model toward distributing private market funds sourced from major Wall Street institutions, including Goldman Sachs and The Carlyle Group.

A spokesperson for Yieldstreet confirmed that the marine loans involved in the recent settlement dated back to 2018 and 2019, part of an asset class the company no longer offers. “While the settlement amount is significantly less than what was originally invested, it allows us to close a chapter of litigation that might otherwise continue indefinitely,” the company said.

Yieldstreet emphasized that it had “advanced its own funds to safeguard investors and absorbed substantial losses alongside them,” highlighting the platform’s ongoing commitment to fiduciary responsibility.

Still, for investors like Arman, the resolution offers little comfort. He invested $180,000 into the marine loan deals in 2019, only to recover about $16,000 through a class-action settlement. Today, he estimates that he has lost more than 90% of his original investment.

“My mother passed away in 2018, and I was looking for a safe place to put the money,” Arman said. “I thought Yieldstreet would be secure—but it wasn’t.”

The loans, initially designed to mature within six months, turned into a six-year ordeal. Now, as the company concludes its legal efforts with minimal restitution for investors, Arman feels deeply disillusioned.

“They’re walking away from this with $5 million to cover their own costs,” he said. “Meanwhile, investors like me are left with nothing.”