Crypto Lender Vauld Seeks Protection From Creditors

Cryptocurrency lender Vauld Group, which is backed by Peter Thiel’s Valar Ventures and Coinbase Global, has filed for protection after pausing withdrawals.

The application for a moratorium order, which was submitted on July 8, was intended to give the company “breathing space it requires to prepare for the intended restructuring for the benefit of all stakeholders,” the company said in a blog post on July 11.

Vauld suspended withdrawals, trading and deposits on its platform as of July 4, per a Wall Street journal report. It is another company in a series of crypto firms that have taken this measure because of the mass volatility and months-long instability in the crypto market.

The lender said “financial difficulties facing key business partners” also factored into its decision.

Its customers had pulled around $200 million in crypto out of the platform since June 12. Vauld also laid off around 30% of its staff, slowed hiring and halved executive compensation as of June.

The Singaporean moratorium order is like a Chapter 11 bankruptcy under the U.S. bankruptcy code. It will help the company avoid a ceasing of operations and liquidating of assets.

Yuankai Lin, a partner with RPC Premier Law in Singapore, said the company will use this to help buy time to get an agreement or settlement in place, or to seek fresh funding or restructure its business.

Vauld was founded in 2018 and has been in talks with Nexo, a crypto lender, which had agreed in principle to hire the company after a 60-day due diligence window.

See also: Crypto Lender Celsius Files for Chapter 11 Bankruptcy

Many companies, including Celsius Network, Voyager Digital and more, have been freezing withdrawals as of late, citing the economic climate. PYMNTS wrote about Celsius’s filing for Chapter 11 bankruptcy earlier in July, a month after it had frozen peoples’ accounts.

The company’s trouble came as it offered big yields to crypto depositors after making big loans which were backed by insufficient collateral.

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