Crypto's $2 trillion shakeout
Vauld, a crypto lender backed by Coinbase Inc., said it froze withdrawals and hired advisers to explore a potential restructuring, joining rivals from Celsius Network to Babel Finance in resorting to last-ditch measures to survive the market rout.
The Singapore-based company hired Kroll as financial adviser and Cyril Amarchand Mangaldas and Rajah & Tann Singapore LLP as legal advisers, Chief Executive Officer Darshan Bathija said in a blog post on Monday. All withdrawals, trading and deposits on the platform have been suspended.
Vauld’s move came less than three weeks after the company said it was processing withdrawals “as usual and this will continue to be the case in the future.” The about-face hints at the speed with which plunging prices are rippling through the sector, bringing firms ranging from Celsius to hedge fund Three Arrows Capital to their knees.
"We have always maintained a balanced and conservative approach to liquidity management. Bull and bear runs are inevitable, and we deploy fundamentally strong strategies that account for these cycles."
Crypto markets showed muted reaction to Vauld’s latest announcement, with Bitcoin trading 1.3 per cent lower at US$19,180 at 10:30 a.m. in London on Monday. The largest cryptocurrency has tumbled more than 70 per cent from its peak in November.
Founded in 2018 by Bathija and Sanju Kurian, Vauld provides crypto lending and deposit products. It raised US$25 million in a Series A funding round led by Peter Thiel’s Valar Ventures in July last year. Coinbase Ventures also participated in the financing.
Bathija said in Monday’s blog post that Vauld had seen “in excess of” US$197.7 million of customer withdrawals since June 12 as market conditions deteriorated. The CEO told the BusinessLine newspaper in May that he was targeting boosting assets under management to US$5 billion from US$1 billion.
The company is also in talks with potential investors, according to the post. It plans to apply for a moratorium with Singapore courts “so as to give us breathing space to carry out the proposed restructuring exercise,” Bathija said.
Vauld will make “specific arrangements” for deposits by customers who need to meet margin calls related to collateralized loans, according to the statement.