Singapore-based cryptocurrency trading and lending platform provider Vauld has suspended all withdrawals, trading and deposits due to what it describes as “financial challenges.”
In a blog post today, the company said the financial issues are the result of volatile market conditions and financial difficulties with key business partners. Vauld also cited the current market climate leading to a significant amount of customer withdrawals of $197.7 million since June 12. That’s when the collapse of the Terra stablecoin triggered the cryptocurrency market, Celsius Network LLC paused withdrawals and Three Arrows Capital Ltd. defaulted on its loans.
Vauld said that, given the circumstances, it had decided that suspending services was in the best interest of stakeholders. The company has also engaged financial and legal advisors to explore and analyze possible options, including restructuring to protect stakeholders’ interests.
Without providing specific details, Vauld also said it’s in discussions with potential investors. The company intends to apply to Singapore courts for a moratorium, a suspension of the commencement or continuation of any proceedings to give it time to carry out a proposed restructure.
On deciding to suspend withdrawals, trading and deposits, Vauld said it believes that “this will help to facilitate our exploration of the suitability of potential restructuring options,” in consultation with its financial and legal advisers.
“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,” the company said. “Specific arrangements will be made for customer deposits as may be necessary for certain customers to meet margin calls in connection with collateralized loans.”
Investors with Vauld will undoubtedly be highly nervous given the news. Vauld appears to be trying to do the right thing in keeping the business alive, but it will not be a big surprise if it collapses. Vauld mentioned both Celsius and Three Arrows Capital. Although for now Vauld is following Celsius’ path, the risk of following Three Arrows is genuine.
Celsius, a cryptocurrency lending company with similarities to Vauld, announced on June 13 that it was pausing withdrawals, citing market volatility. The company said it was taking action to “stabilize liquidity and operations while we take steps to preserve and protect assets.”
Three Arrows Capital filed for Chapter 15 bankruptcy in a New York court on Friday after it was ordered to liquidate assets in the British Virgin Islands. The company said its business had collapsed “in the wake of extreme fluctuations in cryptocurrency markets.”