Vauld, a crypto exchange in Singapore, has gone from a Singapore lender to file protection. Trying to get a moratorium will give lenders room to restructure. The company has been struggling with operations since the beginning of the month due to declining assets. The moratorium was filled a few days after the payment was deferred.
Due to volatile market conditions, deposits, withdrawals and trading were temporarily suspended by Vauld on July 4. This ended a tumultuous three-week period in which users attempted to remove about $198 million from the network.
Around the same time, Vauld experienced a drain on his luck. CEO Darshan Bhatia said his company would cut thirty percent of its workforce.
The application was reportedly filed by the company on July 8th, as indicated in a recent blog post.
Management has concluded that, given the prevailing conditions, it would be in the best interest of all investors (including creditors) to request a moratorium.
Vault is looking for time to reset
This move will give Defi Payments (its Singapore business) and Vault management some breathing room. The company is preparing a planned reorganization, which will be in the interest of all interested parties.
According to Vauld, he continues to work with Nexo. Nexo signed a letter of intent with them about a possible acquisition in early July. However, they did a 60-day due diligence to see if they closed the deal. Vault claims that the due diligence period starts after the 60th day.
A written statement filed on July 8 by Vauld co-founder and CEO Darshan Bhatia reveals that the crypto lender owes its creditors $402 million. Ninety percent of this debt comes from the deposits of individual retail investors. Crypto lending investors include Peter Thiel, Pantera Capital, and Coinbase Ventures.
The moratorium order in Singapore is similar to the Chapter 11 bankruptcy filing in the United States. In both countries, court cases allow companies to avoid injury and carry out day-to-day operations.
Nexo previously announced that it had entered into a partnership with the world’s largest banking institution, Citigroup (C.). This collaboration is an attempt to join other cryptocurrencies that have been impacted by the recent market crash. Citigroup is reportedly planning to expand its presence in Asia. Therefore, he considered acquiring the Vault as part of his preparations.
Vault’s bankruptcy is not unique; The first is Voyager Digital
The Terra Network outage in May exposed heavily indebted participants in the cryptocurrency business. This eventually led to the bankruptcy of Voyager Digital, Celsius Network, and Three Arrows Capital. Due to the lack of available liquidity, some exchanges have temporarily suspended trading activity.
Voyager, for example, immediately felt the effects of Three Arrow Capital’s liquidation. In the second half of June 2022, the company begins a marketing process in which it will either raise funds or liquidate all of its assets. On June 23, 2022, the company reduced the maximum amount a customer can withdraw from $25,000 to $10,000. The company then immediately stopped all trading, deposits and withdrawals.
A week before Voyager filed for bankruptcy, the company signed a $500 million revolving fund with Alameda Ventures Ltd. The facility has $200 million in cash and 15,000 bitcoins. Voyager has announced that it will begin a “two-pronged” restructuring process. The process ends with (x) buying or (y) issuing stock in the reformed company to the company’s customers. Selling the company is the more likely outcome.
Voyager hopes to fund the restructuring plan using Voyager tokens, coins and cash. It also refers to the recovery of Three Arrows capital. However, this plan is nothing more than a summary of the standard options open to any company that has filed for bankruptcy.