TL;DR Breakdown
- Singapore-based Vauld crypto exchange gains court approval to revamp its board amid bankruptcy proceedings.
- Vauld has restarted its Know Your Customer checks, requiring existing clients to resubmit verification documents.
- In July 2022, Vauld halted customer withdrawals due to adverse market conditions, leading to a $200 million bank run.
Description
Singapore-based crypto exchange Vauld has received court approval to overhaul its board of directors. The move is part of the company’s ongoing bankruptcy proceedings, which began in August 2022. Darshan Bathija, Vauld’s co-founder, announced the news on X, formerly known as Twitter, on August 24. The new board will consist of a fresh CEO, a … Read more
Singapore-based crypto exchange Vauld has received court approval to overhaul its board of directors. The move is part of the company’s ongoing bankruptcy proceedings, which began in August 2022. Darshan Bathija, Vauld’s co-founder, announced the news on X, formerly known as Twitter, on August 24. The new board will consist of a fresh CEO, a creditor representative, and a scheme manager.
Moreover, the platform has resumed its Know Your Customer (KYC) checks for existing clients. Customers now need to resubmit their verification documents. This step follows the seizure of $46.4 million by Indian law enforcement from Vauld’s Indian branch, Flipvolt Technologies, last year. The seizure was due to allegations of money laundering.
However, the company’s woes began even earlier. In July 2022, Vauld froze customer withdrawals, citing unfavorable market conditions. A two-week “bank run” led to a staggering $200 million in withdrawals. The company attributed these losses to the plummeting prices of major cryptocurrencies and its exposure to TerraUSD (UST), a stablecoin that collapsed in May 2022.
Additionally, Vauld was granted a three-month moratorium in August 2022 to develop a restructuring plan. Initially, the plan suggested an acquisition by Swiss crypto lender Nexo. Yet, negotiations between the two companies stopped in January 2023. Consequently, Vauld received another period of creditor protection from a Singapore court the same month, which was extended in February.
Significantly, the company owes its creditors around $400 million, most of which belongs to individual depositors. The court’s recent decision to allow board restructuring could be pivotal in the company’s bailout process. How the new management will steer the company out of its financial quagmire remains to be seen.
Hence, the court’s approval for board restructuring offers hope for Vauld’s beleaguered investors. Yet, with the company still owing a colossal sum to its creditors, the road to recovery appears long and fraught with challenges. As the new board takes the helm, all eyes will be on how they navigate these turbulent waters to restore investor confidence and financial stability.
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