Key Takeaways
- Vauld believes suspension would help them facilitate their exploration of the suitability of potential restructuring options, together with their financial and legal advisors.
- The current market climate has led to a significant amount of customer withdrawals over $197.7 m since June 12 2022, says Vauld CEO
- In June, Vauld announced that it had laid off 30% of its workforce
Singapore-based Crypto exchange Vauld has suspended its operations, including withdrawals, trading, and deposits on its platforms, the company said in a blog post on Monday, June 4.
According to the official announcement, the decision was owing to rising “financial challenges”. Vauld believes suspension would help them facilitate their exploration of the suitability of potential restructuring options, together with their financial and legal advisors.
Vauld CEO and co-founder Darshan Bathija, commenting on the recent development, stated that the decision was due to a combination of circumstances including the volatile market, the financial difficulties of its key business partners inevitably affecting them . He further added that the current market climate has led to a significant amount of customer withdrawals in excess of a $197.7 m since June 12, 2022.
The platform has enlisted Kroll for financial advisory services and hired Cyril Amarchand Mangaldas, Rajah & Tann Singapore LLP as legal advisors in India and Singapore, respectively. The company said that “specific arrangements” will be made for customers to meet margin calls in connection with collateralized loans.
Criticism
The sudden decision to suspend withdrawals has drawn flak from users all around the world. Several took to social media to express their frustration. Users and investors are curious to know where their ‘hard-earned” money went. The inaccessibility to their own money has left them frustrated and discontent.
“Since only a fraction of my net asset was in cryptos, my whole portfolio is not dead, and I am not bankrupt but this pinch is like not other.i have never lost this kind of money before #vauld”, one tweet reads.
The crypto exchange is also facing allegations for stealing users money
“Stop trying to distract your users by talking about LUNA. Even after the crash, I’d rather use terra than Vauld. At least they made a mistake and lost people money instead of blatantly stealing their users deposits”.
“Vauld shutting shop is scary for the Indian crypto investment scene. With withdrawals, trading and deposits shut on Vauld, I wonder what will happen to investors who have invested their hard-earned money in their products’, a concerned crypto enthusiast’s tweet reads.
Context
In late 2020, the company formerly known as Bank of Hodlers raised $2 Million to grow into a full crypto bank. Bank of Hodlers had earlier faced allegations of running “a ponzi scheme as a fake bank operating out of India”.
In June, Vauld announced that it had laid off 30% of its workforce, with most of the employees being from India. The company, which raised $27 million as of July 2021, also said that it had reduced its marketing expenses while also cutting executive compensation by 50%, citing the economic slowdown.
Vauld is the latest in a growing list of crypto firms to suspend withdrawals. Global crypto trading volumes steady decline in recent weeks has pushed several crypto firms to the brink of bankruptcy. Recently 3AC-one of the world’s prominent crypto hedge funds, gave in and filed for bankruptcy.
Amid an increasingly volatile crypto market, Crypto lending platforms Celsius and Voyager have also recently suspended withdrawals. Apart from the scathing criticism, the Coinbase-backed platform Vauld has a lot to tackle to save itself from insolvency. Currently, Vauld needs to regain lost investor trust while navigating the storms of the crypto bear market.
