Vauld Becomes Latest Crypto Lending Casualty

Reading Time: 2 minutes
  • Vauld has become the latest crypto lending firm to halt withdrawals
  • The platform offered several factors behind its decision, including the bankruptcy of Three Arrows Capital
  • Vauld is considering restructuring in order to be able to re-open

Singapore-based crypto lending platform Vauld has become the latest casualty of the crypto credit squeeze after it announced today that it is suspending customer withdrawals. Vauld, which is backed by high-profile investors including Peter Thiel’s Valar Ventures, Coinbase Ventures and Pantera Capital, cited several factors in its decision to halt withdrawals while seeking options to restructure its platform. Vauld follows hot on the heels of Celsius, Voyager Digital, and Coinflex in halting withdrawals as the much-discussed ‘crypto contagion’ spreads.

Vauld Impacted by Three Arrows Capital Default

Vauld was founded in March 2018 and had generally enjoyed life in the crypto lending game, surviving the 2018-19 bear market, but it seems that the current turndown is proving too much. The company laid off 30% of its workforce 10 days ago, and today announced that it has halted customer withdrawals.

In a statement regarding the decision, Vauld cited several factors as being behind it – volatile market conditions, the financial difficulties of “key business partners”, the “current market climate” and Three Arrows Capital defaulting on loans to Vauld.

With Three Arrows Capital going into liquidation, it is clear that Vauld doesn’t fancy its chances of getting its money back anytime soon, leading to it suspending all withdrawals, trading and deposits with immediate effect.

Lending Platform Trying to Overcome “Financial Challenges”

Vauld states that it is working on ways to remain solvent and dig its way out of the crisis:

Our management remains fully committed to working with our financial and legal advisors to the best of our abilities to explore and analyse all possible options, including potential restructuring options, that would best protect the interests of Vauld’s stakeholders.

Despite its claims that it can “reach a solution that will best protect the interests of Vauld’s customers and stakeholders”, the scale of the deficit is clearly strong enough for it to be worried about meeting customer obligations, even factoring in other areas or income.

Traditionally this type of action precipitates the worst eventuality to all concerned, and Vauld users will be hoping that the company can find a way through its “financial challenges” and customers once again have access to their funds.