Crypto Lender Vauld Becomes Latest Market Casualty to Suspend Withdrawals

Key Insights:

• Vault is seeking legal counsel for restructuring plans.
• CoinLoan has also limited withdrawals.
• Celsius has started to repay debts to DeFi platform Maker.

On July 4, Vauld, which is also backed by Coinbase, suspended withdrawals, trading, and deposits on its platform. The firm cited volatile market conditions and financial difficulties facing its business partners.

The crypto market crash, and several other high-profile platforms suspending services, have spooked investors who have pulled just under $200 million from Vauld since June 12.

The Singapore-based company issued a statement on Monday notifying customers that it has sought legal counsel to “explore and analyze all possible options, including potential restructuring options,”

We've strived to be an excellent crypto lending platform. This has been our goal from day one. We’re committed to finding the best resolution for our customers.

A message from @darshanbathija 🧵

— Vauld (@VauldOfficial) July 4, 2022

Legal Counsel Sought

Last month, Vauld stated that it would be laying off 30% of its staff, putting the anchors on hiring and halving executive compensation.

According to company CEO Darshan Bathija, the Vauld Group is currently in discussions with potential investors. It will apply to the Singapore courts for a moratorium to give it breathing space for the restructuring.

“We believe that this will help to facilitate our exploration of the suitability of potential restructuring options, together with our financial and legal advisors,” he added.

Vauld, which launched in 2018 offering digital asset trading, custody, and crypto credit, raised $25 million in a Series A funding round in 2021. Investors included Peter Thiel founded Valar Ventures, Pantera Capital, and Coinbase Ventures.

The suspension of services follows the likes of Voyager Digital, which did the same last week, blaming Three Arrows Capital for defaulting on its loans.

Major crypto lender Celsius suspended crypto withdrawals in June and has sourced advisors to prepare for restructuring.

The CoinLoan platform has also limited services and withdrawals in response to the market turmoil. On July 4, the company stated that a spike in withdrawals prompted it to impose a withdrawal limit of $5,000 per day.

Celsius Repaying Debts

In a related development, the embattled Celsius Network (CEL) has repaid $120 million of its debt owed to decentralized stablecoin and lending protocol Maker.

The firm borrowed hundreds of millions from Maker using wrapped Bitcoin (WBTC) as collateral. Maker allows the minting of a dollar-pegged stablecoin called DAI when crypto assets are provided as collateral.

The repayment has enabled Celsius to de-risk its loan position from potential liquidation.

FUN FACT: Celsius Network paid a total of $120,000,000 today on its #Bitcoin backed loan, dropping its liquidation price to $4,967.

— Watcher.Guru (@WatcherGuru) July 4, 2022

Since July 1, Celsius has repaid around $143 million in DAI stablecoins across four separate transactions. DefiExplore, which details the firm’s collateralized debt position (CDP), currently reports a liquidation price of $4,967. Celsius still owes $82 million worth of DAI.

Decentralized finance protocols automatically liquidate positions to sell the collateral if debts are unpaid.