Crypto Lender Vauld Suspends Withdrawals, Company Is Discussing Restructuring Options With Advisors – The cryptocurrency lending business Vauld said on July 4 that it had ceased withdrawals, trading, and deposits after revealing it was “facing challenges.” The Singapore-based cryptocurrency lending platform & exchange stated “financial issues” resulting from key business partners without mentioning any specific organizations.
The financial stability of several cryptocurrency lending platforms has been exposed over the past 30 days. For instance, on June 12, 2022, the cryptocurrency lender Celsius halted “all withdrawals, swaps, and transfers between accounts.” In addition, Voyager declared on July 1 that it was “temporarily stopping trading, deposits, withdrawals, including loyalty rewards.”
On Monday, July 4, Vauld tweeted: “We are facing challenges despite our best efforts. Darshan Bathija, the founder of Vauld, wrote, “this is due to a mix of reasons including the fluctuating market conditions, the financial difficulties of our main business partners ultimately affecting us, and the current market atmosphere.
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The cryptocurrency start-up in Singapore added:
Since June 12, 2022, when the downturn of the cryptocurrency market was precipitated by the failure of Terraform Lab’s UST stablecoin, Celsius Network stopping withdrawals, and 3AC defaulting on loans, this has led to sizable client withdrawals totaling more than $197.7 million.
Vauld went on to say that the startup is presently working with financial and legal advisors in Singapore and India. The company also stated that it is in discussions with advisors about restructuring options and strategies that would “best protect the interests of Vauld’s stakeholders.” Vauld plans to file an application with the Singaporean courts to protect the firm from legal proceedings and request a delay so it can “breathe space to carry out the anticipated restructuring procedure.”
The rest of Vauld’s tweet stated:
In the meantime, we have made the difficult decision to immediately halt all deposits, trading, and withdrawals on the Vauld platform.
According to Bathija, the company is confident that the suspension will enable Vauld to consider possible restructuring options. While Vauld reported a large “uptick in client withdrawals” at his company on June 12, the same day Celsius halted operations, Blockfi’s co-founder Zac Prince noted a similar trend at his company.
Customers were not thrilled with the operations freeze after Vauld’s statement. One person commented on Vauld’s Twitter thread, asking, “Please confirm if user funds are safe or not.” Another guy asked, “I thought Vauld had $100 million insurance.” When asked about insurance, a random person responded, “that insurance protected from hacks, not bankruptcy.”
Well-known companies like Pantera Capital, Valar Ventures, & Coinbase Ventures back Vauld. In addition, due to uncertain market conditions, the company downsized its workforce by 30% on June 21, according to a statement from the startup’s CEO, Bathija. The cryptocurrency lender Vauld has received $27.5 million in funding so far.
In a message, Nick Saponaro, the creator and CEO of cryptocurrency payment company Divi Labs, offered his thoughts on the Vauld scenario. “In recent weeks, trading on the platforms of Celsius, Voyager, and now Vauld, a Singaporean exchange, has all been suspended. The need to make sure individuals are aware of the dangers of using centralized exchanges has never been greater.
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The Divi Labs executive concluded by adding:
Blockchain or cryptocurrency companies are not centralized exchanges or cefi services. It’s critical that we switch to self-custodial products and services that give us complete control over our digital assets and financial futures if we want to regain control. These companies are essentially banks with less regulation, oversight, and also most importantly, responsibility to the consumers they serve.
Originally posted 2022-07-05 17:22:29.