Beaten by the market, Vauld becomes the latest crypto lender to freeze withdrawals

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Key points to remember

  • Crypto lending and trading platform Vauld announced on Monday that it has suspended customer withdrawals due to severe financial difficulties.
  • The Singapore-based startup also said it has hired financial and legal advisers to review a possible restructuring.
  • Vauld, which had over a million customers and $1 billion in assets under management as of May 2022, is just the latest in a string of crypto firms to succumb to bear market pressure.

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Crypto lending and trading platform Vauld has suspended client withdrawals and hired financial and legal advisors to help it assess potential paths forward amid volatility in the crypto market. The firm said it was “face challenges”, citing market conditions and the difficulties faced by its main trading partners.

Vauld suspends customer withdrawals

Vauld has become the latest in a string of crypto firms to halt client withdrawals and consider restructuring due to tough market conditions.

Singapore-based crypto lending and trading startup announced moving Monday blog post, citing “financial challenges” resulting from a combination of factors, including volatile market conditions and the financial contagion triggered by the Terra ecosystem crash in May. “We have taken the difficult decision to suspend all withdrawals, transactions and deposits on the Vauld platform with immediate effect,” company CEO Darshan Bathija wrote in the blog post.

The decision to suspend withdrawals comes weeks after the company published an article reassuring customers that it was liquid and operating as usual. “Vauld continues to operate as usual despite volatile market conditions,” he wrote in a statement of June 16denying any exposure to insolvent crypto lender Celsius and bankrupt crypto hedge fund Three Arrows Capital.

Despite Vauld’s supposed lack of direct exposure to beleaguered entities, the company has failed to escape the broader financial contagion rippling through the entire crypto market. According to today’s announcement, the platform suffered a bank run in which customers drained more than $197.7 million in less than a month, significantly hampering its ability to operate normally.

As a result, Bathija today said the company has hired financial and legal advisers to help it explore potential avenues, including possible restructuring options that would best protect the interests of its stakeholders. “We are currently in discussions with potential investors in the Vauld group of companies,” he said, adding that he was confident Vauld would find a solution that would satisfy the company’s customers and stakeholders.

Vauld, who has most of his team in India, had over a million clients and over $1 billion in assets under management as of May 2022. In July 2021, he raised $25 million during of a Series A funding round led by Peter Thiel’s venture capital firm. Valar Ventures, with participation from other leading investment funds including Pantera Capital, Coinbase Ventures, and CMT Digital.

Vauld is just one of many crypto firms facing serious financial problems due to the continued market decline over the past two months. Since Terra’s $40 billion implosion, several 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, crypto lenders have opted for measures such as freezing withdrawals and planning for restructuring, while former crypto hedge fund giant Three Arrows appears to be almost done as a business. He filed for Chapter 15 bankruptcy in a New York court on Friday.

Disclosure: At the time of writing this article, the author of this article owned ETH and several other cryptocurrencies.

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