Coinbase-backed Vauld has become the latest firm to suspend trading, citing fallout from the market crash.
The platform said that it was facing financial challenges and had to subsequently make the decision. In a statement, the Vauld management said that it was in the best interest of stakeholders to take immediate action.
“… a combination of circumstances such as the volatile market conditions, the financial difficulties of our key business partners inevitably affecting us, and the current market climate which has led to a significant amount of customer withdrawals…”
Specifically, customers have withdrawn over $197.7 million since June 12. It notes the now infamous incidents of Terraform Lab’s UST stablecoin collapse, the pausing of withdrawals by Celsius Network, and the bankruptcy of Three Arrows Capital.
Vauld also said via Twitter that it had engaged the services of financial and legal advisors in India and Singapore and would also look at financial restructuring. The platform is popular in both these countries.
It is estimated that Vauld had one million customers as of May 2022, with approximately $1 billion in assets under management (AuM). Before the market crash, CEO Darshan Bathija said he was expecting a five-fold growth in AuM.
The startup intends to apply to the Singapore courts for a moratorium. “We are confident that, with the advice of our financial and legal advisors, we will be able to reach a solution that will best protect the interests of Vauld’s customers and stakeholders,” he wrote in a blog, adding that the startup will make “specific arrangements” for certain customers who need to meet their margin calls.
Vauld is just another in a growing line of firms facing financial strain in a market that has doused any growth hopes that entrepreneurs and companies once had.
Fear grows as crypto companies buckle under market pressure
Fears are now growing that users from exchanges will withdraw their funds, which could spur a bank run. This may lead to more platforms suspending withdrawals, which would have consequences similar to what the market has seen in the past few weeks. The list of companies that have had to pause withdrawals is large and growing larger — Babel Finance and Celsius Network being two of the biggest platforms to do so.
The market crash has also hit much bigger firms. Three Arrows Capital filed for Chapter 15 bankruptcy, and has fallen a long way from its position of being one of the most well-known crypto hedge funds.
The crypto market and its leaders are now working on damage control, while also preparing measures to prevent the current scenario from ever happening again. There are many actions that crypto industry leaders can take, which will go a long way in protecting all stakeholders.