The troubled cryptocurrency business is once again under stress after Singapore-based lending and trading platform Vauld announced on Monday that it will halt withdrawals and trading and seek new investors.
According to Vauld CEO Darshan Bathija, the company is dealing with "financial challenges" as a result of "volatile market conditions, the financial difficulties of our key business partners that inevitably affect us, and the current market climate that has resulted in a significant amount of customer withdrawals in excess of $197.7 million since June 12."
The most valuable cryptocurrency in the world, Bitcoin, has dropped by over half since early May and was last trading at slightly under $20,000.
In a blog post on June 16, Vauld CEO Bathija stated that withdrawals were being "processed as normal and this will continue to be the case in the future," less than three weeks after Bathija indicated the company "continues to function as usual notwithstanding uncertain market conditions."
Vauld, however, has become the newest casualty of this year's collapse in bitcoin values. The second quarter of 2018 had Bitcoin's lowest quarterly performance since 2011. Over the course of three months, the market value for cryptocurrencies lost billions of dollars.
The bitcoin market fall has revealed weaknesses in a number of projects and business strategies. The algorithmic stablecoin terraUSD crashed in May, devaluing its sibling currency luna. In the meantime, Three Arrows Capital, a significant cryptocurrency hedge fund, went out of business after missing its payment on a more than $660 million loan from Voyager Digital.
As a result of "volatile market conditions, the financial troubles of our main business partners inevitably hurting us, and the current market atmosphere," according to Vauld CEO Darshan Bathija, clients have withdrew more than $197.7 million from the platform since June 12.
The crypto industry has been jolted by a series of collapses in recent months including the demise of so-called stablecoin TerraUSD, huge US-based lender Celsius network suspending withdrawals and Singapore-based crypto hedge fund Three Arrows Capital coming into liquidation.
Crypto exchange FTX has struck a deal with an option to purchase troubled crypto lender BlockFi for up to $240 million, the business announced last week. Crypto lenders have been severely hit by this.
The Singapore-based business said that it is collaborating with its legal and financial advisers to "explore and examine all conceivable options, including prospective restructuring options, that would best protect the interests of Vauld's stakeholders."
The liquidity of crypto loan companies like Vauld has been a problem. Invoking "extreme market conditions," Celsius halted withdrawals for customers last month.
According to Vauld, the company is "in conversations with potential investors."
The business said that it has appointed Kroll Pte Limited as its financial advisor, Cyril Amarchand Mangaldas as its legal counsel in India, and Rajah & Tann Singapore LLP as its legal advisor in Singapore.
Vauld announced that company had hired legal and financial advisors, was in talks with potential investors, and would also apply to the Singapore courts for a moratorium, which would stop any legal action being taken against it while it undertook a reorganization.
A request for comment sent through email to Vauld did not receive a prompt response.