Key Takeaways
The crypto lending and trading platform Vauld announced Monday that it had paused customer withdrawals due to severe financial challenges.
The Singapore-based startup also said that it had hired financial and legal advisors to examine a potential restructuring.
Vauld, which had over 1 million customers and $1 billion in assets under management as of May 2022, is only the latest in a series of crypto firms to succumb to the bear market’s pressure.
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The crypto lending and trading platform Vauld has suspended customer withdrawals and hired financial and legal advisors to help it evaluate potential paths forward amid volatility in the crypto market. The firm has said it is “facing challenges,” citing market conditions and difficulties faced by its key business partners.
Vauld Suspends Customer Withdrawals
Vauld has become the latest in a series of crypto firms to halt customer withdrawals and consider restructuring due to severe market conditions.
We are facing challenges despite our best efforts. This is due to a combination of circumstances such as the volatile market conditions, the financial difficulties of our key business partners inevitably affecting us, and the current market climate.
— Vauld (@VauldOfficial) July 4, 2022
The Singapore-based crypto lending and trading startup announced the move in a Monday blog post, citing “financial challenges” stemming from a combination of factors, including volatile market conditions and financial contagion triggered by the downfall of the Terra ecosystem in May. “We have made the difficult decision to suspend all withdrawals, trading and deposits on the Vauld platform with immediate effect,” the firm’s CEO Darshan Bathija wrote in the blog post.
The decision to pause withdrawals comes weeks after the company published a post reassuring its customers that it was liquid and operating as usual. “Vauld continues to operate as usual despite volatile market conditions,” it wrote in a Jun. 16 statement, denying any exposure to the insolvent crypto lender Celsius and bankrupt crypto hedge fund Three Arrows Capital.
Despite Vauld’d supposed lack of direct exposure to the beleaguered entities, the firm has failed to escape the broader financial contagion rippling through the entire crypto market. According to today’s announcement, the platform endured a bank run in which customers drained over $197.7 million in less than a month, significantly hindering its ability to operate normally.
As a result, Bathija said today that the firm had hired financial and legal advisors to help it explore potential paths forward, including possible restructuring options that would best protect the interest of its stakeholders. “We are currently in discussions with potential investors into the Vauld group of companies,” he said, adding that he was confident Vauld would find a satisfactory solution for the firm’s customers and stakeholders.
Vauld, which has most of its team in India, had over 1 million customers and over $1 billion in assets under management as of May 2022. In July 2021, it raised $25 million in a Series A funding round led by Peter Thiel’s venture capital firm Valar Ventures, with participation from other high-profile investment funds, including Pantera Capital, Coinbase Ventures, and CMT Digital.
Vauld is only one of several crypto firms to face severe financial troubles due to the ongoing market decline over the past two months. Since Terra’s $40 billion Terra implosion, multiple major crypto lenders and hedge funds, including Celsius, CoinFLEX, Babel Finance, BlockFi, Three Arrows Capital, and Hashed, have faced severe liquidity and solvency issues. Like Vauld, the crypto lenders have opted for measures like withdrawal freezes and planning for restructuring, while the onetime crypto hedge fund giant Three Arrows looks to be all but finished as a business. It filed for Chapter 15 bankruptcy in a New York court Friday.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
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