On Monday, yet another crypto lender Vauld hit pause on trading activities, deposits and withdrawals on its platform. The company also announced that it was looking at restructuring options.
Darshan Bathija, the chief executive of Vauld, made the announcement via a blog post on Monday where he said that the volatile conditions of the market had resulted in financial challenges for the company. The CEO said that the financial difficulties its partners were facing, along with the market climate, had affected the company.
He further revealed that since June 12th, almost $197.7 million had been withdrawn from clients of the Vauld platform. The Singapore-based firm disclosed that it was working with legal and financial advisors in order to identify the options available to protect the interest of its stakeholders, including restructuring options.
Change in statements
The decision of the company to hit pause on its deposits and withdrawals comes within three weeks of the CEO asserting that despite the turmoil in the market, the company was operating as per routine. Bathija had stated in a blog post published on June 16th that they were processing withdrawals as per routine and would continue to do so.
However, it appears that the platform has become the latest victim of the troubling conditions of the crypto market, which has seen prices plunge drastically. The second quarter of the year turned out to be the worst one for the world’s leading cryptocurrency, Bitcoin, which hadn’t seen such performance since 2011. This three-month period saw billions of dollars wiped out in terms of market value from the crypto space.
Due to this loss of value, there have been liquidity problems for crypto lending platforms, such as Vauld. It should be noted that the platform is certainly not the only one to have faced these issues. The tide had begun with Celsius Network, which had announced a halt in its deposits, withdrawals and trading activities in the previous month because of the volatile market conditions.
It seems to have opened a door for other companies to do the same, as many have taken the same route. Vauld is just the latest to join the mix and it claimed to be having discussions with potential investors.
It also added that it had hired Cyril Amarchand Mangaldas and Rajah & Tann Singapore LLP as its legal advisors in India and Singapore, respectively. As for financial advisors, the company had opted for Kroll Pte Limited.
The turmoil in the crypto market has highlighted the flaws that exist in a number of business models and projects that have been operating in the space. In May, TerraUSD (UST), which was an algorithmic stablecoin, collapsed and it also took down its sister crypto called LUNA with it. Then, crypto hedge fund Three Arrows Capital defaulted on its $660 million loan that it had taken from Voyager Digital and eventually filed for bankruptcy. The financial burden then saw Voyager Digital also file for bankruptcy, since it has also suffered significant losses.