Cryptocurrency lender  Vauld applies for protection against creditors

– Vauld has filed for bankruptcy due to staggering market conditions. – Nexo signed an MOU with Vauld for possible acquisition. – Earlier, other platforms such as Voyager Digital also signed for bankruptcy.

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Vauld, a Singapore crypto exchange, has moved to file protection from its lenders in Singapore. The move to get a moratorium would give the lender some breathing space to restructure. The firm has been experiencing difficulties with operations since the month began due to falling asset value. The filling of the moratorium comes a few days after the firm suspended withdrawals.

Vauld trouble

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Due to the volatile market conditions, Vauld temporarily halted deposits, withdrawals, and trading on July 4th. This ended a turbulent three-week stretch during which users attempted to remove roughly $198 M from the network.  At roughly the same time, Vauld was going through a run on its assets. CEO Darshan Bathija stated that his company would be laying off thirty percent of its workforce.

Vauld seeks time to reorganize itself

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The move will provide Defi Payments (its Singapore business) and the management of Vauld with breathing room. The firm is setting itself up for the envisaged reorganization, which will be in the interest of all stakeholders. According to Vauld, it is continuing to engage with Nexo. Nexo signed a memorandum of understanding with them earlier in July for a possible acquisition. However, they are conducting 60-day due diligence to establish if they are closing the deal. Vauld claims that the due diligence period will begin after the 60th day.

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Vauld files for a Moratorium Order 

A moratorium order in Singapore is comparable to a Chapter 11 bankruptcy petition in the United States. In both countries, the legal processes enable businesses to avoid being wounded and carry out daily operations. The crypto lender owes $402 million to its creditors. Ninety percent of that debt arises from individual retail investor deposits. Among the investors in Vauld are Peter Thiel, Pantera Capital, and Coinbase Ventures.

Vauld bankruptcy is not unique

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The failure of the Terra network in May revealed the over-leveraged actors in the cryptocurrency business. It ultimately led to the bankruptcy of Voyager Digital, Celsius Network, and Three Arrows Capital. Due to a lack of available liquidity, some exchanges have temporarily halted trading activities.

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