Not your keys, not your coins. Crypto CeFi lender Vauld has suspended “all withdrawals, trading, and deposits.”
Crypto contagion claims another fatality. In a declaration, Singapore-based crypto exchange Vauld has made the “difficult decision to suspend all withdrawals, trading, and deposits on the Vauld platform with immediate effect.”
In what appears to be a run on the crypto bank, the group intends to “apply to the Singapore courts for a moratorium,” as Vauld customers have tried to draw an “excess of a $197.7 million since 12 June 2022.”
The decision to suspend withdrawals is a screeching U-turn. Allegedly, Vauld boasted $1 billion assets under management in May this year, while on June 16, a company email stated that business would “continue to operate as usual.” Just 18 days later, the company is exploring “potential restructuring options.”
On June 21st, CEO, Darshan Bathija tweeted that Vauld had cut their team by 30%–the first sign that the company was under duress. Separately, Bathija also stressed that Three Arrows Capital (3AC) was an early investor in the company, but had exited in late 2021:
The statement from Vauld recommends that “volatile market conditions, the financial difficulties of our key business partners inevitably affecting us, and the current market climate,” were reasons behind their decision to freeze customers’ money.
Nonetheless, 3AC’ decease is cited and considered a substantial contributor to capitulation among CeFi (Centralised Finance) companies. 3AC had a substantial introduction to Terra (originally Luna, now LUNC) which blew up in spectacular fashion reducing 3AC’s holdings from $560 million to $670.
Certainly, Vauld follows in the footsteps of large CeFi platforms such as Celsius, Voyager, and BlockFi. Voyager explicitly blamed 3AC for their current decision to freeze customers’ funds; BlockFi is close to a $240 million deal with FTX following financial difficulties, while plans to recover Celsius from bankruptcy were recently shared by lead investor BnkToTheFuture.
For crypto investigative journalist Otterooo, Vauld’s trouble is more impetus for investors to hold their own keys. Holding onto one’s private keys is a “guiding principle” of crypto investing: if you do not hold your own keys, you do not own your coins.
As Cointelegraph reported in a March 2021 press announcement, Vauld bragged double-digit interest rates on popular stablecoins such as Tether (USDT) and DAI, while Bitcoin (BTC) interest could reach 7.23%. In effect, in “lending” your cryptocurrency tokens to Vauld, you would generate a yield; however, the company effectually owns your assets.
The rates were viable with lenders and interest bearers such as Celsius, BlockFi, and Nexo–one of which continues to function. Nexo claims in a tweet that there may be delays to customer transactions due to Independence Day in the United States.
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