Crypto lending platforms are increasingly under the microscope and the latest evidence of “tragic contagion” is Singapore-based crypto lending firm Vauld, who just became the latest to suspend all withdrawals, trading and deposits on its platform.
The blowback has been swift and brutal:
Contagion in Market Motion
In a prepared statement, Vauld’s co-founder and CEO Darshan Bathija outlined the reasons for the decision to suspend services:
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 which has led to a significant amount of customer withdrawals in excess of $197.7m since 12 June 2022 when the decline of the cryptocurrency market was triggered by the collapse of Terraform Labs’ UST stablecoin, Celsius network pausing withdrawals, and Three Arrows Capital defaulting on their loans.
Darshan Bathija, co-founder and CEO, Vauld
Just weeks ago, the firm announced cuts to its staff complement, suggesting it may have foreseen pain on the horizon:
Tellingly, within a matter of days, a suite of other crypto businesses followed suit including BlockFi, Crypto.com, Coinbase and, most recently, Banxa.
Advisory Firm to Assist with Corporate Restructure
Vauld, which raised US$25 million last year, has now enlisted an advisory firm to assist with its corporate restructure, claiming that management is “fully committed” to achieving the best outcome for all stakeholders.
In the interim, the company has made the “difficult decision” to suspend all services and has committed to providing an update to its customers in due course. Many influencers have been called out for promoting Vauld, while others appeared to take a more sanguine approach:
Given the recent market downturn coupled with the drama at Terra, Celsius, BlockFi and Three Arrows, it’s no surprise to see depositors flee for safety. As the ‘Oracle of Omaha’, Warren Buffett, once opined:
It’s only when the tide goes out that you learn who’s been swimming naked.
Warren Buffett
Disclaimer:
The content and views expressed in the articles are those of the original authors own and are not necessarily the views of Crypto News. We do actively check all our content for accuracy to help protect our readers. This article content and links to external third-parties is included for information and entertainment purposes. It is not financial advice. Please do your own research before participating.
Credit: Source link
