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Crypto Project Failed As Another Lender, Vauld, Pauses Withdrawals

vauld pauses withdrawals
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EDITOR'S NOTE: The crypto project has failed. What started out as a move toward financial and monetary  “independence” has morphed into a kind of hypernaive utopianism fueled not by ideology but by speculation-driven irrationalism. Note that we’re not talking about blockchain or blockchain-driven technologies. We’re talking about the supposed monetary value of their associated coins. Blockchain developers are like the tech startups of the 1990s. Some will find widescale adoption while others will go bust. Regardless, adoption is key. But the speculation surrounding these developments has seen billions in funds plunge to nothing as cryptocurrencies have failed to prove their value and supposed functionality as safe0haven investments (e.g. inflation hedge, market hedge, etc.). Equally misleading is the “crypto winter” meme, which claims a cyclicality (winter is cyclical). So, another misled crypto institution, Vauld, halts withdrawals as Three Arrows Capital crypto hedge fund goes bankrupt. It’s what happens when you stake financial decisions on assets that hold no real or time-tested intrinsic value. Meanwhile, gold and silver are staying put and poised to soar. Sadly, it’s a lot of money wasted on digital assets trying to supplant physical assets of real value, especially when the only value driving the former was hype. 

KEY POINTS
  • Crypto lender Vauld on Monday paused all withdrawals, trading and deposits on its platform and is exploring potential restructuring options, the company said.
  • Vauld said it is facing “financial challenges” due to “volatile market conditions” which has led to customers withdrawing more than $197.7 million from the platform since June 12.
  • Vauld is the latest victim of the cryptocurrency price plunge this year that has exposed flaws in a number of digital coin projects and business models.

Crypto lender Vauld on Monday paused all withdrawals, trading and deposits on its platform and is exploring potential restructuring options, the company said.

Vauld CEO Darshan Bathija said in a blog post on Monday that the company is facing “financial challenges” due to “volatile market conditions, the financial difficulties of our key business partners inevitably affecting us, and the current market climate” which has led to customers withdrawing more than $197.7 million from the platform since June 12.

The Singapore-based company said it is working with its financial and legal advisors to “explore and analyse all possible options, including potential restructuring options, that would best protect the interests of Vauld’s stakeholders.”

Vauld’s move to halt withdrawals comes less than three weeks after CEO Bathija said the company “continues to operate as usual despite volatile market conditions.” In a June 16 blog post, Bathija said withdrawals were being “processed as usual and this will continue to be the case in the future.”

But Vauld has become the latest victim of the plunge in cryptocurrency prices this year. Bitcoin had its worst quarterly performance since 2011 in the second quarter. Billions of dollars were wiped off the value of the cryptocurrency market in the three-month period.

The market crash has exposed flaws in a number of cryptocurrency projects and business models. In May, algorithmic stablecoin terraUSD collapsed taking down its sister token luna. Meanwhile, major cryptocurrency hedge fund Three Arrows Capital fell into liquidation after defaulting on a more than $660 million loan from Voyager Digital.

Crypto lending firms such as Vauld have faced liquidity issues. Celsius last month paused withdrawals for customers citing “extreme market conditions.”

Vauld said it is “in discussions with potential investors” in the company.

The company said it has hired Kroll Pte Limited as its financial advisor, as well as Cyril Amarchand Mangaldas and Rajah & Tann Singapore LLP as its legal advisors in India and Singapore respectively.

Originally published on CNBC.

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