Coinbase-backed Vauld intends to apply to Singapore courts for a moratorium i.e. a suspension of the commencement or continuation of any proceedings against the company until it figures out the best course of action.
Singapore-based crypto exchange Vauld said in a blog post on July 4 that the company has decided to suspend all withdrawals, trading, and deposits on its platform with immediate effect amidst financial challenges arising from the crypto crash and drop in volumes due to the regime in India.
The company said that it is forced to look for new investors and explore restructuring options to stay afloat in the current environment. Vault’s current investors include Coinbase Ventures, PayPal co-founder and billionaire investor Peter Thiel’s Valar Ventures, CMT Digital, Gumi Cryptos, Robert Leshner, and Cadenza Capital.
Meanwhile, in what may come as a setback for the platform’s customers who may want to challenge this move, Vauld has said that it intends to apply to Singapore courts for a moratorium i.e. a suspension of the commencement or continuation of any proceedings against the company until it figures the best course of action.
This raises concerns over crypto exchanges being custodians of customers’ tokens and holding back investments with no regulations to protect the interests of customers in the absence of any regulations around exchanges.
The announcement comes days after the company laid off 30 percent of its workforce. Moneycontrol was the first to report on June 21 that the company will be looking at reducing marketing expenses, slowing hiring, reducing executive compensation by 50 percent, and pausing most vendor engagements.
“We believe that this will help to facilitate our exploration of the suitability of potential restructuring options, together with our financial and legal advisors. We seek the understanding of customers of the Vauld platform that we will not be in a position to process any new or further requests or instructions in this regard,” the blog read.
“Specific arrangements will be made for customer deposits as may be necessary for certain customers to meet margin calls in connection with collateralized loans.”
The company has engaged the services of Kroll Pte as its financial advisor, as well as Cyril Amarchand Mangaldas and Rajah & Tann Singapore LLP as legal advisors in India and Singapore respectively.
However, Vault is not the first to freeze withdrawals after the crash in cryptocurrency prices. The platform drew criticism from users after it paused deposits and withdrawals in June.
In a blog post on June 20, CoinDCX said that the move was in a bid to ‘strengthen its compliance and risk framework’. The platform also said that deposits & withdrawals remain disabled for everyone by default.
“This was done in a series of steps, including improving KYC coverage, enhancing the risk framework for crypto deposit & withdrawal, and integrating with compliance and monitoring tools like Coinfirm, Solidus Labs, Signzy, Digilocker, etc., over the last six months. Over the past month, we have been gradually restricting crypto deposits & withdrawals for multiple users,” CoinDCX said.
Vault, founded in 2018 by Darshan Bathija and Sanju Kurian, helped crypto investors earn and borrow crypto, including borrowing against your own assets and having no cap on daily withdrawals.
Although headquartered in Singapore, Vauld’s core market is India where exchanges and investors saw a massive setback after the government announced a 30 percent tax on gains from virtual digital assets (VDAs) including crypto, besides a 1 percent tax deduction at the source (TDS).
Volumes across exchanges dropped drastically in the past few months with daily traders wary of the TDS, worsened by the crash in crypto prices. Volumes are expected to drop further now that the TDS has come into effect on July 1.
Investors are expected to have moved on to trading on decentralized exchanges or foreign exchanges in a bid to avoid the impact of the TDS and income tax. Meanwhile, what is also worrying the industry is the impending Bill that will regulate crypto trade and exchanges.