Vauld, a crypto lending and exchange firm headquartered in Singapore, announced on Monday that it has suspended withdrawals, trading, and deposits on its platform, citing the current “financial challenges”.
Vauld admitted that it is witnessing financial woes amid the ongoing market downturn, which it said prompted customers to withdraw about $198 million since June 12.
Darshan Bathija, the founder and CEO of Vauld, said that the company is exploring restructuring options and so far, has engaged Kroll, a New York-based corporate investigation and risk consulting firm, for financial advisory services, and has hired Cyril Amarchand Mangaldas and Rajah & Tann Singapore LLP as legal advisors in India and Singapore respectively.
“We are confident that, with the advice of our financial and legal advisors, we will be able to reach a solution that will best protect the interests of Vauld’s customers and stakeholders,” said Bathijaand, adding that the firm will make specific arrangements for certain clients who need to meet their margin calls.
Vauld is a three-year-old crypto lending startup, which counts Peter Thiel-backed Valar Ventures, Coinbase Ventures, and Pantera Capital among its key backers. According to July last year, Vauld had raised a total of $27 million, from investors such as Peter Thiel’s Valar Ventures, Coinbase, Pantera Capital, and Cadenza Capital.
Vauld has been offering lending services and serving as an exchange. The platform enables clients to earn what it describes as the “industry’s highest interest rates on major cryptocurrencies.” On its website, Vauld claims to offer 12.68% annual yields on staking several stablecoins, including USDC and BUSD and 6.7% on Bitcoin and Ethereum tokens. The platform allows customers to borrow against their tokens and facilitates many other trading services.
Crisis in Crypto Lending Landscape
The announcement regarding Vauld’s suspension of customer withdrawals and trading comes after the lender laid off its employees by 30% one week ago.
The job cut came as a surprise. On June 16, Bathija assured Vauld customers that the platform had no exposure to prominent lending platform Celsius Network and high-profile crypto hedge fund firms Three Arrows Capital.
In recent weeks, crypto veterans, including Binance CEO Changpeng Zhao, have warned that many more DeFi platforms are in danger of collapsing amid the current market crash.
On 13th June, Crypto lending platform Celsius Network paused all withdrawals and transfers for customers as the firm faced insolvency and bankruptcy fears. Last Friday, Three Arrows Capital filed for Chapter 15 bankruptcy in New York after weeks of speculation that it was insolvent.
In addition, another major crypto lending platform, Maple Finance, recently halted customer withdrawals after facing liquidity-related issues.
Digital assets lending firm Genesis Trading is reportedly facing losses in the hundreds of millions after the company had significant exposure to financial woes facing Three Arrows Capital and crypto lending platform Babel Finance. BlockFi also experienced substantial losses related to its exposure to Three Arrows Capital.
Such lending firms normally collect crypto deposits from retail customers and invest them in the equivalent of the wholesale crypto market, including “decentralized finance (DeFi) sites that use blockchain technology to offer services such as loans, insurance, among others outside the traditional financial sector.
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