Crypto Lender Vauld Halts Withdrawals As Stress Mounts On Crypto Industry

Vauld’s CEO has said that the crypto exchange is halting all trading, deposits, and withdrawals owing to financial difficulties.

Vauld Suspends Withdrawal

As it navigates “financial challenges,” Vauld, a Singapore-based cryptocurrency lending and exchange firm, has suspended withdrawals, trading, and deposits on its platform.

The three-year-old firm, which has raised approximately $27 million from investors including Pantera Capital, Coinbase Ventures, and Peter Thiel-backed Valar Ventures, claimed that the market collapse had forced customers to withdraw about $198 million since June 12.

“ 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. All this has led to a significant amount of customer withdrawals over $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”

Vauld appeared to be in trouble for some time because the cryptocurrency exchange had earlier revealed that it would downsize its employees by 30% in June. Vauld also stated in the release that it was lowering its marketing expenditures, lowering hiring efforts, and slashing executive salary by 50%. The business has given the economic downturn as justification for this. Commenting on the suspension of trading, Vault wrote:

“We believe that this will help to facilitate our exploration of the suitability of potential restructuring options, together with our financial and legal advisors. We seek the understanding of customers of the Vauld platform that we will not be in a position to process any new or further requests or instructions in this regard.”

According to reports, the company is setting up customer deposits to cover margin calls in relation to collateralized loans.

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Vauld has also disclosed that it is seeking possible investors right now.

BTC/USD Slides below $20k. Source: TradingView

The Singapore-based crypto company has employed Cyril Amarchand Mangaldas and Rajah & Tann Singapore LLP as legal and finance counsel, respectively.

Less than three weeks after announcing that withdrawals were being processed “as usual” and “continuing to be the case in the future,” Vauld made its move.

Vauld continues to operate as usual

"We have always maintained a balanced and conservative approach to liquidity management. Bull and bear runs are inevitable, and we deploy fundamentally strong strategies that account for these cycles."

Read more here: https://t.co/6yWVozTydE

— Vauld (@VauldOfficial) June 16, 2022

The firm also plans to ask the Singaporean courts for a moratorium, which would allow any legal actions against the pertinent companies to be suspended from starting or continuing. The much-needed “breathing space to carry out the proposed restructuring exercise” will be provided to Vauld as a result.

Move Indicates Industry Crash

There has been a domino effect following the collapse of Terra’s native blockchain token Luna, which is said to have removed $40 billion from the cryptocurrency market.

The reversal is a sign of how quickly falling prices are affecting the industry, taking down companies like Celsius and hedge fund Three Arrows Capital.

As it searches for “strategic alternatives,” cryptocurrency lender Voyager announced on Friday that it would halt trading, deposits, withdrawals, and loyalty awards. Earlier in June, FinBlox enforced a temporary withdrawal freeze. Withdrawals from CoinFLEX were supposed to run till June 30, however they haven’t started back up yet.

Particularly impacted are crypto lenders, and cryptocurrency exchange FTX has agreed to negotiate a contract with an option to purchase troubled crypto lender BlockFi for up to $240 million, the firm announced last week.

Many seasoned cryptocurrency experts, including Changpeng Zhao, the founder and CEO of Binance, have recently issued warnings that many more DeFi sites are in danger of collapsing. Zhao said in a recent podcast that Binance had recently spoken with over 50 companies to assess finance and bailout prospects for some enterprises.

“The same deals that you see in the news of other people looking at, they typically come to us first,” he said. “We have the largest cash reserves of any exchange. We like to save the industry as much as possible, but not all projects are worth saving.”

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Featured image from Unsplash, chart from TradingView.com