Crypto contagion claims another victim. In a statement, Singapore-based crypto exchange Vauld has made the “difficult decision to suspend all withdrawals, trades and deposits on the Vauld platform with immediate effect.”
In what appears to be a run on the crypto bank, the group intends to “apply to the Singapore courts for a stay” as Vauld clients have attempted to withdraw a “$197.7 million in excess as of June 12, 2022”.
The decision to suspend withdrawals is a 180-degree turn. Vauld reportedly boasted of having $1 billion in assets under management as of May this year, while on June 16, an email from the company stated that business would “continue business as usual.” Just 18 days later, the company is exploring “possible restructuring options.”
On June 21, CEO Darshan Bathija tweeted that Vauld had cut his team by 30%, the first sign that the company was under pressure. On the other hand, Bathija also underlined that Three Arrows Capital (3AC) was one of the first investors in the company, but that it had exited at the end of 2021.
We’ve sent an email about this. We do not have direct exposure to 3AC or Celsius.
Full disclosure: 3AC was a seed investor in us since 2020, who facilitated a complete exit in Dec 2021.
— Darshan Bathija (@darshanbathija) June 23, 2022
Vauld’s statement suggests that “the volatile market conditions, the financial difficulties of our main trading partners that inevitably affect us and the current market climate” were the reasons that motivated his decision to freeze the clients’ money.
Nevertheless, the demise of 3AC is cited and seen as a major factor in capitulation among centralized finance companies (CeFis). 3AC had a major exposure to Luna Classic (LUNC), which flared up spectacularly, reducing 3AC’s holdings from $560 million to $670 million.
In fact, Vauld follows in the footsteps of big CeFi platforms like Celsius, Voyager, and BlockFi. Voyager explicitly blamed 3AC for its recent decision to freeze customer funds and BlockFi is close to a $240 million deal with FTX. following financial difficulties, while plans to save Celsius from bankruptcy were recently shared by lead investor BnkToTheFuture.
For crypto investigative journalist Otterooo, Vauld’s fight is further motivation for investors to keep their own keys. Preserving private keys is a guiding principle of cryptocurrency investing: If you don’t have your own keys, you don’t own your coins.
VAULD closes withdrawals, undergoing debt restructuring
another cefi lender bites the dust
its a broken business model
either withdraw today or spend years battling lawyers for YOUR MONEY
DON’T BE STUPID ANON, withdraw to cold wallet NOWhttps://t.co/X3H8iLCuYi pic.twitter.com/hS2vv2IBJo
— otteroooo (@otteroooo) July 4, 2022
As Cointelegraph reported in a March 2021 press release, Vauld boasted double-digit interest rates on popular stablecoins like Tether (USDT) and Dai (DAI), while Bitcoin (BTC) interest could reach 7.23%. In effect, by “lending” your tokens to Vauld, you would generate a return. However, the company effectively owns its assets.
Rates were competitive with lenders and interest carriers like Celsius, BlockFi, and Nexo – one of which is still in business. Nexus tweeted that there could be delays in customer transactions due to Independence Day in the United States.
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