Vauld, a cryptocurrency lending and exchange startup, is headquartered in Singapore. On July 4, the company suspended withdrawal, trading and deposit operations on its platform effective immediately, as Vauld is currently struggling with “financial challenges.”
The startup, whose investors include Valar Ventures, Coinbase Ventures and Pantera Capital backed by Peter Thiel, has raised about $27 million. On Monday, the company spokesman said they were facing financial problems amid a downturn in the market, and customers had withdrawn about $198 million since June 12.
Vauld co-founder and CEO Darshan Bathija commented that the startup is analyzing restructuring options and has turned to Kroll for financial consultations and Cyril Amarchand Mangaldas and Rajah & Tann for legal advice in India and Singapore. It is not known how many users the platform serves.
“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,” wrote Bathija in his blog, adding that the firm will make “specific arrangements” to keep the clients’ deposits and their income.
In 2020, the company rose on the back of interest in yield farming and crypto lending. Going beyond India, Vauld has expanded its reach to the U.K., Singapore and other countries.
Vauld allows customers to earn what it claims are “the industry’s highest interest rates on major cryptocurrencies.” On its website, it says users can earn 12.68 percent annually when they place several stable coins, including USDC and BUSD, and 6.7 percent on Bitcoin and Ethereum tokens. Before the suspension, Vauld allowed users to borrow against their tokens and provided a number of other services.
According to Vauld’s website, the platform offers customers to borrow up to an LTV (loan to value) of 66.67% of their tokens and instantly approves their loans. However, many cryptocurrency tokens have fallen in value by more than 70% in the past six months, causing immediate difficulties for such companies.
Bathija commented, “We seek the understanding of customers of the Vauld platform that we will not be in a position to process any new or further requests or instructions in this regard. Specific arrangements will be made for customer deposits as may be necessary for certain customers to meet margin calls in connection with collateralized loans.”
Two weeks before the announcement, Vauld had cut its workforce by 30%, which came as a surprise. On June 16, the CEO assured the platform’s users that Vauld would not suffer the fate of Celsius, another lending startup that is experiencing growing problems, and Three Arrows Capital, one of the well-known crypto hedge funds that filed for bankruptcy last weekend.
“We remain liquid despite market conditions. Over the last few days, all withdrawals were processed as usual and this will continue to be the case in the future,” Bathija commented earlier.