Can Vauld Recover? What went wrong with Vauld?
A cryptocurrency exchange called Vauld stopped processing withdrawals, deposits, and trades. This happened as a result of various circumstances, including financial troubles, fluctuating market conditions, the Terra Luna crash, and other factors that are leading the crypto market to crash. In the midst of the turbulent period for cryptocurrency markets, Vauld is in negotiations with Nexo for a 100% takeover.
What we are going to learn?
So what is Vauld?
In 2018, Sanju Kurian and Darshan Bathija launched Vauld, a company that offered investors in cryptocurrencies a range of services. Along with fixed deposits, the exchange’s platform also provided Lending and borrowing money backed by assets in addition to cryptocurrency investing. On the platform of the exchange, there were more than 800000 active investors. The exchange opted to advertise and market through influencers rather than the more conventional means.
Where did Vauld go wrong?
The recent crypto crisis and the ensuing decline in retail interest, according to the management of Vauld, have caused the company to experience major financial problems.
Platforms for crypto lending, like Vauld, rely significantly on yield farming, which is often arbitrage. These organizations lend cryptocurrency obtained from consumers and engage in market arbitrage between cash and future of market. Such platforms made an effort to profit from the fact that a particular crypto coin has a significant value in India relative to another nation on another exchange. This was done in an effort to increase the yield on the tokens lent.
However, it was unable to fend off macroeconomic downturns such as the crypto winter, the Terra Luna crash, and the Celsius sage. Users began to fear as a result, and they started taking their money out of various exchanges. Arbitrage or yield farming chances experienced a sharp decline when the crypto market began to decline. Even the margin calls were activated, which increased the selling pressure beyond only the token crashes.
In a previous attempt at survival, the company fired 30% of its employees in June, drastically cut its marketing spending, and reduced CEO remuneration. Vauld, however, was helpless to salvage the day. In the end, Vauld’s demise was sealed by new tax regulations and general pessimism in the cryptocurrency market, which resulted in a liquidation worth more than 200 million dollars in less than a month.
What comments has the business made?
According to us, this will make it simpler to investigate whether alternative reorganization options are appropriate with the help of our legal and financial specialists. The Vauld platform’s users are politely requested to understand that we will not be able to fulfill any new or extra requests or directives in this regard. The company’s announcement post states that particular arrangements for customer deposits would be implemented as they may be needed for some customers to achieve margin calls in combination with collateralized loans.
What lies in store for Vauld in the future?
For its 100% acquisition, Vauld is now negotiating with the cryptocurrency platform Nexo. In order to expand its presence in Asia, Nexo hopes to exploit the acquisition. Additionally, the corporation made it clear that it would request a moratorium from the Singaporean courts. Whenever a firm requests a moratorium, all legal actions against that company are put on hold. The applicant needs some breathing space for the anticipated reorganization, hence the reason. Outside legal and financial consultants are also being sought by the corporation.
What options do investors have?
The acquisition by Nexo news was praised by market experts, who saw it as a relief for the investors. Nevertheless, these procedures take a lot of time and call for a detailed investigation of the company’s finances. Investors with significant holdings in cryptocurrencies are advised by market experts to spread out their investments. Keep larger valuables in cold wallets; this is the more cautious way.
DeFi lending organizations have been particularly severely impacted by the current bear market blues, which have had widespread implications on the cryptocurrency market. Vauld has the ability to bounce back, and it can do so if it plays its cards correctly.