On Monday, July 4, 2022, crypto trading and lending platform, Vauld, stopped customer withdrawal services from its platform. Darshan Bathija, the CEO of Vauld Crypto Exchange wrote in a blog post that this was due to a combination of circumstances, namely the prevailing volatile market condition.
What Exactly Happened To Vauld?
Vauld was established in 2018 and has over 275 coins listed on its platform. Vauld promotes long-term investing by providing a choice of systematic investment plans (SIPs), interest on cryptocurrency holdings up to 12.68 per cent, and other benefits to its customers on their money. Vauld received a funding of $25 million Series A in July 2021 from companies, such as Coinbase Ventures, Pantera Capital, and Valar Ventures. Vauld increased its assets under management (AUM) by over ten-fold, and its user base by over 40 times using these funds. They intended to grow their 40-person workforce to around 200 people.
The majority of Vauld’s users are Indians, who contribute up about 20 per cent of the AUM, and as much as $10–15 million per day to the platform’s volume. Vauld receives relatively little to no brokerage income, in contrast to other exchanges, but instead makes significant amounts of money through interest by lending cryptocurrency to other enterprises, much in the same way in which traditional banks lend money to others.
Users began pulling their money out of multiple exchanges in a panic after the crypto winter, the Luna collapse, the Celsius saga, and the 3 Arrow Capital crackdown.
On its part, Vauld slashed executive salaries, reduced marketing expenses, and 30 per cent of its workforce in June 2022 in order to withstand this crypto catastrophe. In a statement released in June, Vauld claimed that they had never previously been exposed to either 3AC or Celsius. However, due to the general market unease and the imposition of the new tax regulations on Indian users, Vauld experienced withdrawals of $200 million in just the previous 25 days.
Notably, Vauld is now considering reorganisational strategies. To that purpose, it has appointed Kroll as its financial advisor, Cyril Amarchand Mangaldas as its legal counsel in India, and Rajah & Tann Singapore LLP as its legal advisor in Singapore.
“Our management remains fully committed to working with our financial and legal advisors to the best of our abilities to explore and analyse all possible options, including potential restructuring options that would best protect the interests of Vauld’s stakeholders,” says Bathija.
According to Bathija, Vauld is actively speaking with possible investors.