"Vauld Group filed an application on July 8 to seek a moritorium order in favor of the company, a spokesperson for the company confirmed. The move gives Vauld and its management the 'breathing space it requires to prepare for the intended restructuring for the benefit of all stakeholders" [Huang, V. Peter Thiel-Backed Crypto Lender Vauld Files for Protection Against Creditors. (Accessed July 21, 2022)].
Vauld, a cryptocurrency lender backed by Peter Thiel’s Valar Ventures and Coinbase Global Inc, seeks this relief after halting withdrawals earlier this month following a run on the company's assets as well as following paring of its staff by 30% in June.
"Vauld issued a statement on July 11 informing the public that it would pursue a moratorium order to give management 'the breathing space it requires to prepare for the intended restructuring for the benefit of all stakeholders.' However, as the Journal reported, the moratorium application was filed three days prior" [Bourgi, S. Crypto lender Vauld seeks protection against creditors: Report. (Accessed July 21, 2022)]. This corporate statement also contained the following information:
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 in favour of Defi Payments. This is so as to give Defi Payments and the Vauld management the breathing space it requires to prepare for the intended restructuring for the benefit of all stakeholders. At this time, the Vauld Group continues to have discussions with Nexo Inc whilst Nexo Inc carries out is due diligence, and also explore potential restructuring options that would best protect the interests of the Vauld Group’s stakeholders.
[Vauld. Corporate Statement(July 11th 2022). (Accessed July 21, 2022)].
"Nexo has signed a term sheet with Vauld giving it 60 days of exclusive talks to explore an all-equity acquisition of the company [Browne, R. Crypto lender Nexo offers to buy embattled rival Vauld as market consolidates. (Accessed July 21, 2022)]. It is unknown at this time whether or not the Nexo lifeline will bailout Vauld as apparently Nexo is still exercising due diligence.
Reviewing the history of Vauld's troubles shows "On June 16, 2022, an official from Vauld took to Twitter to assure it was processing requested withdrawals as usual and would continue to do so" [Nagoda, K. The On-Going Contagion Claims Yet Another!. (Accessed July 21, 2022)].
But then, on July 4, 2022, Vauld CEO, Darshan Bathija, announced:
... we have made the difficult decision to suspend all withdrawals, trading and deposits on the Vauld platform with immediate effect. 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. Specific arrangements will be made for customer deposits as may be necessary for certain customers to meet margin calls in connection with collateralised loans.
[Vauld. Corporate Statement. (Accessed July 4, 2022)].
This "...about-face hints at the speed with which plunging prices are rippling through the sector, bringing firms ranging from Celsius to hedge fund Three Arrows Capital to their knees" [Shukla, S. Crypto Lender Vauld Freezes Withdrawals, Eyes Restructuring. (Accessed July 21, 2022); see also, Nagoda, supra].
It should be noted that a moratorium order issued in Singapore is akin to the filing of a Chapter 11 bankruptcy petition in the United States. However, this moratorium order assists the subject company in avoiding closure while proceeding forward with its restructuring endeavo.
"The collapse of the Terra ecosystem in May exposed the crypto industry’s over-leveraged players, resulting in the high-profile bankruptcies of Celsius Network, Voyager Digital and Three Arrows Capital. Several exchanges have temporarily suspended trading operations due to liquidity constraints" [Bourgi, supra].