Vauld, a cryptocurrency-focused lender, has halted all withdrawals, trading, and deposits with immediate effect.
Another victim of the crypto contagion. The painful decision to suspend all withdrawals, trading, and deposits on the Vauld platform with immediate effect has been made by Singapore-based cryptocurrency exchange Vauld.
The business plans to “appeal to the Singapore courts for a moratorium” since Vauld customers have attempted to withdraw “excess of a $197.7 million since 12 June 2022,” in what looks to be a run on the crypto bank.
The decision to halt withdrawals is an abrupt about-face. According to reports, Vauld touted managing $1 billion in assets in May of this year. On June 16, a firm email stated that operations would “continue as usual.” After only 18 days, the business is looking into “possible restructuring possibilities.”
Vauld’s CEO, Darshan Bathija, tweeted on June 21 that the company had reduced its personnel by 30%, which was the first indication that it was being pressured. Separately, Bathija emphasized that Three Arrows Capital (3AC) had invested in the business early on but had since left in late 2021:
According to Vauld’s statement, its decision to freeze customers’ funds was motivated by “volatile market conditions, the financial troubles of our important business partners inevitably affecting us, and the current market climate.”
Nevertheless, the fall of 3AC is mentioned and seen as a key factor in the capitulation of CeFi (Centralised Finance) enterprises. When Terra (formerly Luna, now LUNC) went bust spectacularly, 3AC’s exposure increased from $560 million to $670 million.
Vauld does indeed follow in the steps of significant CeFi platforms like Celsius, Voyager, and BlockFi. Voyager specifically attributed their recent move to suspend customer cash to 3AC; BlockFi is close to a $240 million transaction with FTX as a result of financial troubles; and principal investor BnkToTheFuture recently revealed efforts to save Celsius from bankruptcy.
Vauld’s conflict provides further incentive for investors to hold their own keys, according to investigative journalist for cryptocurrencies Otterooo. A “guiding principle” of cryptocurrency investing is to cling onto one’s private keys: if you don’t have your own keys, you don’t own your coins.
Vauld advertised double-digit interest rates on well-known stablecoins like Tether (USDT) and DAI, while the interest rate on Bitcoin (BTC) could reach 7.23%. You would make a yield by “loan” Vauld your cryptocurrency tokens, but the company would actually be the owner of your assets.
The interest rates were competitive with those offered by lenders and interest-bearing companies like Celsius, BlockFi, and Nexo—one of which is still operational. The United States’ Independence Day may cause delays in consumer transactions, according to a tweet from Nexo.
