Crypto Lender Vauld Granted 3-Month Protection from Singapore Court against Creditors

Singapore High Court has granted distressed crypto lending firm Vauld a three-month moratorium to continue exploring options on how it can repay its creditors.

The latest legal action from the court allows them to enjoy a three-month moratorium that stops its creditors from starting or continuing any legal proceedings. Vauld now has bought some time until Nov 7 to explore its options. Meanwhile, the court has asked Vauld's creditors to form a committee.

Following demand letters from some creditors, the judge has given the deadline for Vauld to explore mechanisms for withdrawal for creditors in need.

The crypto lending company owes more than $400 million to its creditors, 90% of which came from individual retail investor deposits.

The lender is currently in the process of due diligence in an exploratory period while the court proceedings take place in the background.

All the creditors will receive updated financial details on the Peter Thiel-backed cryptocurrency lender in another eight weeks, the court stated on Monday in a virtual hearing.

The three-month extension means discontented creditors of Vauld cannot begin or continue any legal proceedings against the firm while it explores its restructuring options.

Vauld's operations remain halted while its client funds are locked until the firm reaches a restructuring deal, including its potential acquisition by rival London-based crypto lender Nexo.

Vauld had been seeking a six-month moratorium period from the court to prepare for the intended restructuring of the firm and possible acquisition by Nexo.

What Went Wrong with Crypto Lending Firms

On July 5, Singapore-based crypto lender Vauld suspended all withdrawals, trading, and deposits on its platform – an unfortunate incident triggered by the downturn in crypto markets.

Therefore, the firm announced plans to explore potential restructuring options to navigate the challenges it experiences.

A few days later, on July 8, Vauld filed for bankruptcy protection in a Singapore court to give itself "the breathing space" required to prepare for its planned restructure.

It is the latest company to get caught up in the current chaos gripping the crypto world. The recent market crash adversely impacted the operations of several lending firms, including Vauld, Three Arrows Capital, Celsius Network, Voyager Digital, and BlockFi, among others.

The problematic situations have forced some companies to file for bankruptcy while others are looking for emergency capital infusions.