Keys lost in the Vauld: A Singaporean cryptocurrency exchange suspends withdrawals

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Keys lost in the Vauld: A Singaporean cryptocurrency exchange suspends withdrawals

Keys lost in the Vauld: A Singaporean cryptocurrency exchange suspends withdrawals
Source: CoinTelegraph
1657001442 05 Jul / 06:10

The influenza pandemic claims another victim. In a statement, Singapore-based cryptocurrency exchange Vauld said it has made the "tough choice to immediately cease all withdrawals, trading, and deposits on the Vauld platform."

In what looks to be a run on the cryptocurrency bank, the business plans to "appeal to the Singapore courts for a moratorium" since Vauld users have attempted to withdraw "more than $197.7 million" since June 12 2022.

The decision to suspend withdrawals represents an abrupt about-face. In May of this year, Vauld reportedly managed $1 billion in assets, while on June 16, a corporate email said that operations would "continue as usual." After only 18 days, the corporation examines "possible restructuring options."

On June 21, Vauld’s CEO Darshan Bathija tweeted that the firm had reduced its workforce by 30 percent, the first indication that the company was under pressure. Separately, Bathija emphasized that Three Arrows Capital (3AC) was an early investor in the firm but had left the company before the end of 2021.

Vauld’s statement implies that “volatile market conditions, the financial problems of our important business partners, and the present market climate” influenced their decision to freeze client funds.

Nonetheless, 3AC’s downfall is mentioned and regarded as a crucial factor in the collapse of centralized finance (CeFi) firms. 3AC had significant exposure to Luna Classic (LUNC), which imploded spectacularly, causing its holdings to increase from $560 million to $670 million.

Vauld follows massive CeFi systems like Celsius, Voyager, and BlockFi. Voyager directly blamed 3AC for their recent decision to block client assets, BlockFi is close to a $240 million agreement with FTX due to financial troubles, and critical investor BnkToTheFuture just revealed intentions to save Celsius from bankruptcy.

For crypto investigative journalist Otterooo, Vauld’s conflict offers more incentive for investors to keep their private keys. Possessing one’s private keys is a fundamental tenet of cryptocurrency investing: if you do not have your keys, you do not own your coins.

According to a March 2021 news release by Cointelegraph, Vauld offered double-digit interest rates on popular stablecoins like Tether (USDT) and Dai (DAI), while Bitcoin (BTC) interest rates may reach 7.23 percent. Essentially, you would produce a return by “loaning” your cryptocurrency tokens to Vauld. However, the firm owns your assets effectively.

The rates were comparable to those of lenders and interest bearers such as Celsius, BlockFi, and Nexo, of which one is still operational. Nexo tweeted that Independence Day in the United States may cause delays in consumer transactions.

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