Vauld is one of the crypto exchange platforms available today. It was formed in 2018 by Bathija and Kurian. The firm offers its customers borrowing sites, fixed deposits, and asset-based lending services. On July 4th, Vauld announced that it would suspend critical services from its platform, i.e., all withdrawal and deposit services. The company cited that it was facing extreme financial struggles because of the current instability experienced in the cryptocurrency market. The article will highlight and discuss some reasons that have made Vauld pause its withdrawal and deposit services.
Financial struggles
In a blog a while ago, the management team at Vauld confirmed that the firm was still experiencing major financial struggles, despite putting all efforts into staying afloat. The management continued by saying that the recent extreme volatility of the crypto market has caused many Vauld customers to withdraw their cash. The volatility was initiated when the Terra-Luna stablecoin from Terraform collapsed. It was further worsened when the Celsius network suspended withdrawals and the defaulting of a loan by Three Arrows Capital. Vauld reported that from June 12th, the crypto market capsize had made its customers withdraw assets worth approximately $198 million. Since its creation, the crypto firm has generated approximately $27m from its investors, some of which are Coinbase Ventures and Pantera Capital.
Restructuring
Currently, the firm is talking with a few of its possible investors. In addition, the firm is strategizing to apply for a moratorium from the court in Singapore. That means that all ongoing proceedings or intended proceedings against the relevant firms will be paused, thus allowing Vauld some space to proceed with its restructuring program. After analyzing the current situation with its legal and financial advisors, the firm reported that it strongly believes that this move will aid the firm in accommodating its various structuring options. The firm announced that it would not process incoming requests or instructions. However, since some of the customers have margin calls to meet regarding collateralized loans, Vauld announced to come up with a specific arrangement to accommodate them. Vauld hired Cyril Mangaldas in India to facilitate this reorganization as its chief legal advisor. Moreover, the company has obtained the services of Rajah and Tann Singapore LLP from Singapore.
Cutting costs
Vauld seemed to be encountering difficulties at the start of June this year after it had clarified that it was planning to reduce its workforce by around 30%. Vauld also reported that it would diminish its hiring endeavors, reducing the salaries of all executive members by 50% and its marketing costs. Vauld cited its financial struggles and the economic capsize as the core reasons behind this move.
Conclusion
All these factors have coupled together made Vauld pause all its key services. Nonetheless, the primary factor is the Crypto Winter. The Crypto Winter, together with the Three Arrows Capital and Terraform scandals, made Vault’s customers begin to withdraw their cash in fear of making losses, therefore worsening the situation at the firm, which was already experiencing financial struggles.
Interesting Related Article: “Top 5 ways to Use Cryptocurrency”
from Latest Technology News https://ift.tt/cf2sG9z
via IFTTT
0 Comments