- Vauld has halted withdrawals for its customers, citing unfavorable market conditions.
- The lending platform received nearly $200 million worth of withdrawals from clients in under two weeks.
- Across the industry, crypto lending platforms are crumbling with Terra’s collapse seen as the trigger for the chaos.
Vauld becomes the latest lending platform to capitulate under dire market conditions. The firm has halted withdrawals after customers began withdrawing their funds en masse.
Vauld halts withdrawals
Singapore-based crypto lending platform, Vauld has announced that it has paused withdrawals for clients due to the financial problems facing the firm. Vauld’s CEO Darshan Bathija disclosed this through a blog post on Monday that highlighted the remote causes of the challenges.
Bathija wrote that Vauld was subject to a run on the bank with customers withdrawing over $197.7 million since the middle of June. He claimed that the frantic withdrawals by customers were a result of the collapse of TerraUSD (UST), market leader Celsius famously pausing withdrawals, and Three Arrows Capital imploding.
“As such, we have considered that it would be in the best interest of stakeholders to take immediate action in the circumstances,” said Bathija. He suggested that the firm would explore all options including restructuring to ensure that stakeholders’ interests are protected.
The firm will be applying to the courts for a suspension of any legal proceedings against the company by disgruntled parties. Bathija notes that the moratorium will give the company “breathing space to carry out the proposed restructuring exercise”.
Aside from suspending withdrawals, Vauld has “made the difficult decision” to also halt all trading and deposits with immediate effect. Vauld was founded in 2018 and raised $25 million in its Series A round that was backed by Pantera Capital, Coinbase Ventures, and Valar Ventures.
Why are lending firms collapsing
Crypto lending firms are going through the roughest patch in crypto history following a series of firms pausing all crypto activities. Celsius was the first firm to announce that it had suspended withdrawals and almost instantaneously, the castle began to fall apart.
BlockFi, CoinFlex, and recently Voyager have all restricted customer activities on their platform. A key denominator among all the affected firms is “extreme market conditions” while others have cited Three Arrows Capital defaulting on its loans as the reason for their financial difficulties.
Without a doubt, conditions in the crypto markets are extreme with the market capitalization sinking below $1 trillion from highs of nearly $3 trillion. Apart from the decline in prices, the ecosystem has been rocked by Terra’s implosion while macroeconomic factors like inflation and rising interest rates continue to plague the industry.