Vauld Becomes Latest Casualty Of Crypto Crash; Suspends Operations

SUMMARY

The company has suspended all withdrawals, trading and deposits on the Vauld platform with immediate effect

Last month, Vauld also laid off 30% of its workforce, with most of the employees being from India

In the past 25 days, users have already withdrawn over $197 Mn after the market started crashing

Amid a 2008-like recession within crypto markets, users are withdrawing (read: salvaging) their money from crypto exchanges. Triggered by one such withdrawal symptom, crypto platform Vauld has announced plans to suspend operations.

Vauld, an asset-backed lending and borrowing platform, supported 30+ cryptocurrencies and partnered with exchange and custody partners such as Binance and BitGo. It allows users to lock their cryptos into fixed deposits with up to a 12.68% interest rate.

Now, the Singapore-based wrote in a blog post that the current market climate has led to significant customer withdrawals. Since June 12, users have withdrawn over $197.7 Mn after the decline (triggered by the Terra Luna collapse, Celsius network pausing withdrawals, Three Arrows Capital defaulting on their loans) in the crypto markets. It is yet unclear how much value of assets has Vauld loaned to Three Arrows Capital.

Vauld cofounder and CEO Darshan Bathija stated that the financial difficulties of its key business partners were affecting the company. Thus, it is looking for a potential restructuring.

“We are currently in discussions with potential investors in the Vauld group of companies. We intend to apply to the Singapore courts for a moratorium – a suspension of the commencement or continuation of any proceedings against the relevant companies so as to give us breathing space to carry out the proposed restructuring exercise,” Bathija said in the blog post.

Peter Thiel’s Valar Ventures, Coinbase Ventures and Pantera Capital are investors in Vauld and the company last raised $25 Mn in July 2021.

The moratorium will allow the company to delay its response if it faces legal challenges from the customers whose money might still be stuck with Vauld. The startup, in terms, has now halted users from not only trading on the platform but also from withdrawing their funds.

“Specific arrangements will be made for customer deposits as may be necessary for certain customers to meet margin calls in connection with collateralised loans,” the blog read.

Vauld Join Several Crypto Exchanges Shutting Withdrawals

In the last 12 months, CoinSwitch Kuber and CoinDCX disabled crypto as well as fiat withdrawals. On the other hand, CoinSwith Kuber and WazirX disabled INR deposits. Last week, crypto broker Voyager Digital also announced the suspension of trading, deposits and withdrawals.

According to reports (& Vauld and Voyager’s posts), much of the industry’s recent liquidity and withdrawal symptoms are due to the Terra Luna crash, majorly affecting a hedge fund company Three Arrows Capital.

Three Arrows had suffered huge losses since it bet on every cryptocurrency, including Luna (which wiped 99.99% of investors’ wealth). Now, Three Arrows has filed for bankruptcy and is undergoing liquidation, but the effect on the crypto market remains visible.

Reports suggest that as crypto markets slumped, the bear market has wiped out $2 Tn of the market value.

Update | July 5, 2022, 9:55 AM

WazirX has disabled INR deposits. The story has been updated to reflect the same.