Another casualty as crypto funk deepens

Company News

by Glenn Dyer

The crisis in crypto deepened again on Monday when another lender halted withdrawals and trading.

Vauld is a crypto lender based in Singapore and backed by the high profile website, Coinbase and US billionaire investor and Trump supporter, Peter Thiel.

It said Monday had moved to suspend withdrawals and trading because of “financial challenges” due to “volatile market conditions” which saw customers withdraw close to $US200 million since June 12.

From this statement its clear the company didn’t have the resources to continue to meet withdrawal demands from its customers so it followed the likes of Celsius Networks and Voyager Digital shut up shop to halt outflows.

Vauld, which offered clients annual returns of up to 40% to lend out their crypto tokens, said it had appointed advisers to look at all potential options, including a restructuring.

The group’s decision to suspend redemptions followed decisions last month by lenders BlockFi and Celsius to halt withdrawals and crypto hedge fund Three Arrows Capital collapsed and was put into liquidation. Last Friday, Voyager Digital announced the suspension of trading, deposits, and withdrawals due to difficult market conditions

Vauld said in mid-June it did not have any exposure to Celsius or Three Arrows Capital. But it still cut 30% of its staff and cut executive pay in half. “We’ve taken the painful decision to reduce Vault’s headcount by about 30%,” Dharshan Bathija, CEO of Vauld revealed in a tweet on June 21.

Celsius cut 150 staff last week or 23% of the reported headcount of 650 people. Coinbase laid off over 1,100 employees in June, with exchanges Bybit, Huobi, Banxa, and several others also cutting staff numbers as well.

“We remain liquid despite market conditions. Over the past few days, all withdrawals were processed as usual and this will continue to be the case in the future,” it said in a statement on June 16.

But Monday it said the Three Arrows’ collapse had been a factor in triggering a stream of client withdrawals.

“We are facing challenges despite our best efforts,” Vauld said on Monday. “This is due to 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.”

Vauld raised $US25 million in a funding round a year ago. Among the participants were Coinbase’s venture capital arm, crypto hedge fund Pantera Capital and Valar Ventures, a venture capital company co-founded by Peter Thiel.

Other crypto lenders were more directly exposed, with Voyager Digital claiming Three Arrows failed to make good on $US650 million in loans. BlockFi also said it had sustained losses of $US80 million tied to Three Arrows.

Late last Friday, Voyager itself halted withdrawals, while BlockFi said on the same day that it had reached a deal under which trading platform FTX would provide it with fresh financing in exchange for an option to purchase the crypto lender – in other words, a bailout.

The news had no impact on the price of bitcoin which was up more than 3% just before 8am Sydney time Tuesday to just over $US19,800.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

Are you a 708 sophisticated investor?

A sophisticated investor is defined under Section 708 of the Corporations Act (net assets of $2.5 million or annual incomes in excess of $250,000).

They are eligible to receive information regarding wholesale investment opportunities that are not available to regular or retail investors.

Please subscribe if you would like to be alerted to these types of opportunities.