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Crypto exchange Vauld has suspended deposits and withdrawals on its platforms citing “financial challenges” amid the crypto market’s volatile conditions. Founded in 2018 by Bathija and Sanju Kurian, Vauld provides a suite of products to crypto investors. This includes fixed deposits and asset-backed lending and borrowing platforms. We take a look at why Vauld has halted its operations (withdrawals and deposits).
Financial difficulties
The Vauld management in a blog post said that it is facing financial challenges despite its best efforts. The crypto company said that the current market climate had led to a significant amount of customer withdrawals when the decline of the cryptocurrency market was triggered by the collapse of Terraform Lab’s Terra-Luna stablecoin, Celsius network pausing withdrawals, and Three Arrows Capital defaulting on their loans.
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.
Restructuring
Vauld is currently in discussions with potential investors. The company intends to apply to the Singapore courts for a moratorium i.e. a suspension of the commencement or continuation of any proceedings against the relevant companies to give the company breathing space to carry out the proposed restructuring exercise.
“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. Specific arrangements will be made for customer deposits as may be necessary for certain customers to meet margin calls in connection with collateralised loans,” the company said.
Downsizing
Earlier last month, Vauld appeared to be in trouble for some time because it said it would downsize its employees by 30 per cent in June. The company also stated in the release that it was lowering its marketing expenditures, lowering hiring efforts, and slashing executive salaries by 50 per cent. The business has given the economic downturn as justification for this.
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