Troubled Crypto Firm Vauld Filed for Protection Against Creditors (Report)

One of the worst affected crypto companies by the unpleasant macroeconomic conditions – Vauld – reportedly filed for protection against creditors in Singapore. The process should grant the entity the “breathing space” it needs to reconstruct its distressed operations.

Looking for a Way Out

It is safe to say that the crypto winter has harmed numerous organizations in the field, including the Singaporean digital asset exchange – Vauld. Last month, the company backed by Peter Thiel’s Valar Ventures and Coinbase suspended deposits, withdrawals, and trading. Shortly after, it dismissed around 30% of its staff, citing the economic slowdown and prolonged market downturn.

According to a recent coverage by WSJ, Vauld will attempt to ease the turbulence by filing for protection against creditors. The process is much similar to Chapter 11 bankruptcy in the USA. The debtor remains in charge of its operations and receives more time to resolve its financial problems. In Vauld’s case, the moratorium should give the company the necessary “breathing space” after all the adverse events:

“The management has decided that, in light of the current circumstances, it would be in the best interests of all stakeholders (including creditors) to file the Application for a moratorium order … This is so as to give Defi Payments [its Singapore entity] and the Vauld management the breathing space it requires to prepare for the intended restructuring for the benefit of all stakeholders.”

It is worth mentioning that Singapore is home to another digital asset firm that has experienced significant issues amid the ongoing bear market – Three Arrows Capital (3AC). Its problems were mainly prompted by the collapse of Terra’s algorithmic stablecoin – UST – and its native token – LUNA – as well as the failing prices of most digital currencies.

As a result, the crypto hedge fund failed to meet margin calls last month. Days later, a court in the British Virgin Islands ordered it into liquidation. This was considered a major hit for the industry since some of 3AC’s creditors include BlockchainCom and Voyager Digital. According to some sources, the firm owns approximately $3.5 billion to 27 entities.

Can Nexo Provide a Light in the Tunnel?

As CryptoPotato reported earlier this month, the cryptocurrency lender – Nexo – has been closely monitoring Vauld’s issues and might soon purchase it. The two parties signed a 60-day exclusive exploratory period focused on the deal. If successful, the agreement will see Nexo owning up to 100% of the Singaporean firm.

Darshan Bathija – Vauld’s Co-Founder and CEO – opined that the acquisition could ensure additional protection for investors and ease some of the platform’s problems:

“Operating under the Nexo umbrella puts us instantly in a position of strength to continue the execution of our fiduciary obligations to our customers and at the same time to execute upon both companies’ ambitious roadmaps, regardless of the market conditions.”