Large cryptocurrency lender Vauld stops trading after $ 198 million in customer withdrawals

by Arthur · July 4, 2022

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Singapore-based Vauld on Monday became the latest cryptocurrency platform to stop customer withdrawals as a result of the emerging market’s sharp decline over the past month, telling customers they will also explore restructuring options as analysts warn that market declines are likely to continue until a broader fear of recession . avta.

Coinbase-backed Vauld has begun exploring restructuring plans – and has become the latest casualty of a … [+] nearly $ 2 trillion fall in the crypto market.

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In a blog post early Monday, cryptocurrency lender and trading platform Vauld said it “made the difficult decision to suspend all withdrawals, trading and deposits … with immediate effect” as a result of “economic challenges” stemming from volatile market conditions.

The four-year-old startup, which has raised around $ 27 million from investors such as Coinbase Ventures, blamed bearish sentiment – driven by the collapse of Terraform Labs UST stablecoin, other stop-stopping platforms and Three Arrows Capital, which defaulted on its loans – for having sparked “significant” customer withdrawals of $ 197.7 million since June 12.

As a result of the weakness, Vauld also said that they have recruited finance and law firms to explore restructuring options that would “best protect the interests of Vauld’s stakeholders”, and claimed that freezing customer withdrawals would help “facilitate” efforts.

Just last month, the company’s CEO Darshan Bathija announced that the company would lay off around 30% of its more than 100 employees, while tempering the concerns by saying that the cuts would not affect the company’s services, products or client investments.

Vauld’s announcement comes three days after New Jersey-based cryptocurrency brokerage firm Voyager Digital announced it would also suspend withdrawals after hedge fund Three Arrows Capital failed to make the necessary payments of about $ 660 million worth of bitcoin and stablecoin loans; 3AC filed for bankruptcy the same day.

The collapse of Three Arrows Capital has led to a “tragic contagion” in the crypto market and triggered the collapse of other companies, GlobalBlock analyst Marcus Sotiriou said in email comments Friday, noting that some companies have struggled to keep up with customers such as trying to withdraw money. their funds “at an extraordinary rate.”

What to look for

Although he says that the fear and uncertainty have led to bitcoin becoming “extremely cheap” according to several indicators, Sotiriou warns that the decline in the crypto market is likely to continue until there is a decline in inflation. For several months, consumer prices have risen to their highest level in 40 years – pushing the Federal Reserve to raise interest rates and relax financial support while investors worry that aggressive action could trigger a recession.

Surprising fact

The world’s cryptocurrencies have lost around $ 300 billion in value over the past month – pushing the market to an 18-month low of $ 890 billion and losing nearly $ 2 trillion since November.

Key background

Historically low interest rates and government stimulus measures led to sky-high cryptocurrency prices during the pandemic, but Fed rate hikes to curb rising inflation have since hit general market sentiment. To highlight industry problems, the popular brokerage house Coinbase laid off about 18% of employees last month, while the company’s billionaire boss, Brian Armstrong, warned investors that a potential recession could lead to a prolonged bear market for cryptocurrencies. The price of bitcoin, at about $ 19,500, has fallen more than 70% from a record high of around $ 69,000 in November.