On July 4, the crypto lending company Vauld announced it suspended withdrawals, trading, and deposits after disclosing the firm is “facing challenges.” While not naming any specific companies, the Singapore-based cryptocurrency lending platform and exchange mentioned “financial difficulties” stemming from “key business partners.”
Vauld Suspends Withdrawals Over ‘Financial Difficulties’
A number of crypto lending platforms revealed their financial woes over the past 30 days. For instance, the crypto lender Celsius paused “all withdrawals, swaps, and transfers between accounts,” on June 12, 2022. Furthermore, on July 1, Voyager announced the crypto company was “temporarily suspending trading, deposits, withdrawals and loyalty rewards.”
Vauld revealed it was doing the same on Monday, July 4, when the company tweeted: “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’s founder Darshan Bathija wrote. It was founded in Singapore by a crypto startup called CryptoStart.
This has resulted in significant customer withdrawals in excess of $197.7 million since June 12, 2022, when the decline of the cryptocurrency market was triggered by the collapse of Terraform Lab’s UST stablecoin, Celsius Network pausing withdrawals, and 3AC defaulting on loans.
Vauld said that Vauld has been coordinating with Indian and Singaporean legal and financial advisers. The firm also mentioned the company is talking about restructuring options with the advisors and methods that would “best protect the interests of Vauld’s stakeholders.” Vauld intends to apply with the Singapore courts to protect the firm from any proceedings and ask for time so Vauld can have “breathing space to carry out the proposed restructuring exercise.” Vauld’s Twitter announcement continued:
We have taken the hard decision to temporarily suspend withdrawals and trading on Vauld. [effective immediately].
Bathija claims that Vauld’s suspension will allow them to look into possible restructuring alternatives. While Vauld mentioned a massive number of withdrawals took place on June 12, the same day Celsius paused operations, Blockfi’s co-founder Zac Prince noted that his company witnessed a significant “uptick in client withdrawals” that day as well.
Following Vauld’s announcement, customers were not pleasedwith the operations freezing. “Please confirm if user funds are safe or not?” one individual replied to Vauld’s Twitter thread. “I thought Vauld has $100 [million] insurance,” another person asked. “That [insurance] protected from hacks, not bankruptcy,” a random individual saidAnswering the question about insurance.
Vauld is supported by well-known companies like Valar Ventures, Pantera Capital and Coinbase Ventures. The company also reduced its staff by 30% on June 21 over “uncertain” market conditions, according to an announcement from the startup’s founder, Bathija. The crypto lender Vauld raised $27.5million from investors to date.
Nick SaponaroDivi Labs’ founder and CEO commented on Vauld in a letter sent to Bitcoin.com News. “In recent weeks Celsius, Voyager and now Vauld, a Singapore-based exchange have all suspended trading on their platforms. There has never been a more important time to ensure people understand the risks of using centralized exchanges.” Saponaro further stressed that centralized finance (cefi) and exchanges are antithetical to the crypto movement. According to the Divi Labs executive:
Cefi services and centralized exchanges do not support crypto or any blockchain company. They are essentially banks with less regulation, oversight, and most importantly, responsibility to the consumers they serve — To take back control, it’s vital that we move to self-custodial products and services that put us in full control of our digital assets and financial futures.
What do you think about Vauld’s announcement on Monday? Comment below and let us know how you feel about the subject.
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