Crypto contagion: Vauld joins Voyager and other lenders in freezing withdrawals
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It’s still catching. The disastrous Crypto Contagion of 2022, that is. Singaporean crypto exchange/lending platform Vauld is the latest to signify it’s in financial boiling water, announcing a freeze on withdrawals.
In a blog statement posted earlier today, Vauld revealed it’s made the “difficult decision to suspend all withdrawals, trading and deposits on the Vauld platform with immediate effect.”
In the meantime, we have made the difficult decision to suspend all withdrawals, trading and deposits on the Vauld platform with immediate effect.
— Vauld (@VauldOfficial) July 4, 2022
The ongoing “crypto contagion” refers to the financial unravelling of various big-money crypto platforms – particularly centralised “CeFi” crypto lenders – and other entities following the implosion of Do Kwon’s Terra LUNA in May.
Vauld, as a mid-tier crypto lender, has naturally invited speculation from many as to the level, if any, of exposure it may have had to the likes of crypto hedge fund Three Arrows Capital (3AC) or any others that appear to be on the verge of bankruptcy.
On June 21, CEO, Darshan Bathija revealed that Vauld had cut its team by 30 per cent, foreshadowing further difficulties. Bathija also made it clear that 3AC was a seed/early investor in the company but had exited in late 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 we facilitated a complete exit in Dec 2021.
— Darshan Bathija (@darshanbathija) June 23, 2022
In its statement today, Vauld wrote that it’s seen withdrawals of about US$198 million since June 12, which happens to be the day before the huge crypto lender Celsius paused withdrawals on its platform, also coinciding with a further downturn in the crypto market.
Bitcoin (BTC) was already struggling around US$28k at that point and it’s been in a fight to claim $20k as support ever since.
Vauld is now apparently looking at restructuring options and has hired Kroll Pte Limited as a financial adviser as well as two separate law firms in Singapore and India for legal counsel.
According to CoinDesk, the crypto lender raised US$25 million in Series A funding last year, with Pantera Capital, Coinbase Ventures and the Peter Thiel-founded Valar Ventures among its investors.
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
— otteroooo (@otteroooo) July 4, 2022
The Vauld news comes just a few days after major New York-based crypto broker Voyager Digital announced it has also suspended all trading, deposits, withdrawals and loyalty rewards on its platform.
“This was a tremendously difficult decision, but we believe it is the right one given current market conditions,” said Stephen Ehrlich, CEO of Voyager on June 1.
“This decision gives us additional time to continue exploring strategic alternatives with various interested parties while preserving the value of the Voyager platform we have built together,” he added.
Voyager Digital says in a series of tweets that it’s pursuing strategic alternatives and that it’s focused on protecting assets and maximizing value for all customers as quickly as possible https://t.co/ejqXD6Q8cK
— Bloomberg (@business) July 3, 2022
Voyager previously issued a notice of default to 3AC for the latter’s failure to make the required payments on a whopping-great loan of 15,250 Bitcoin (BTC) and $350 million worth of USD Coin (USDC).
“Voyager is actively pursuing all available remedies for recovery from 3AC, including through the court-ordered liquidation process in the British Virgin Islands,” wrote the firm.
The New York crypto company recently received a whack of “bail-out” assistance (reportedly about US$518m in various credit plans) from Alameda Ventures, which is FTX founder Sam Bankman-Fried’s quantitative trading firm.
“Troubled Crypto Broker #VoyagerDigital Has Halted All Trading, Withdrawals & Deposits”👀
As previously mentioned in my #3AC thread, Voyager was in hot water. Despite the $500M loan from Alameda, the exchange is in a position that has led to a 26% share drop in the past 24h…
— Kyle Chassé (@kyle_chasse) July 3, 2022
According to a report by The Block, Bankman-Fried and FTX have also just struck a US$680 million credit deal to acquire Voyager’s crypto-lending firm rival BlockFi.
The upshot on that is FTX could end up nabbing BlockFi for anything up to about US$240 million. BlockFi was a US$3 billion-valued company back in March last year.