Vauld Singapore has announced the suspension of all withdrawals, trading, and deposits on the Vauld platform “with immediate effect.”
The crypto exchange plans to “apply to the Singapore courts for a moratorium,” as Vauld clients have attempted to withdraw an “excess of $197.7 million since 12 June 2022.”
Vauld Singapore under duress
The first indication that Vauld was under strain came on June 21, when CEO Darshan Bathija tweeted that the company had cut its team by 30%. Separately, Bathija emphasized that Three Arrows Capital (3AC), a company that had invested in the business early on, had left in late 2021.
We've taken the painful decision to reduce Vauld's headcount by about 30%
More information: https://t.co/gD7epuXuvo
— Darshan Bathija (@darshanbathija) June 21, 2022
In a statement, Vauld claimed that their decision to freeze customer funds was motivated by “volatile market conditions, the financial challenges of our key business partners that inexorably affect us, and the current market climate.”
However, the fall of 3AC is acknowledged as a crucial factor in the capitulation of centralized finance (CeFi) organizations. 3AC has a sizable amount of exposure to Luna Classic (LUNC), which exploded spectacularly and decreased 3AC’s holdings from $560 million to $670 million.
Crypto contagion
Vauld follows in the footsteps of major CeFi platforms like Celsius, Voyager, and BlockFi. Voyager has blamed 3AC for their recent move to freeze clients’ assets, BlockFi is near to a $240 million transaction with FTX following financial issues, and lead investor BnkToTheFuture has recently announced intentions to save Celsius from bankruptcy.
Vauld promised double-digit interest rates on popular stablecoins such as Tether (USDT) and Dai (DAI) in a March 2021 news release, while Bitcoin (BTC) interest might reach 7.23%. You would make a yield by “lending” your cryptocurrency tokens to Vauld. The firm, however, effectively owns your assets.
The interest rates were competitive with those offered by lenders and interest-bearing companies like Celsius, BlockFi, and Nexo, one of which is still operational. According to a tweet from Nexo, the United States’ Independence Day may cause delays in customer transactions.