Crypto lender Vauld offered lifeline a day after suspending withdrawals

Nexo, founded in 2017 by Antoni Trenchev, says it manages $15 billion in assets for more than 4 billion users worldwide. Its native token, nexo, plunged to 50 cents in early July from its one-month high of $1.29.

On Monday, Vauld chief executive Darshan Bathija announced that the platform had suspended all withdrawals, trading and deposits for its 800,000 members. He said more than $197.7 million had been withdrawn since June 12 amid a broader industry meltdown, which included the zeroing of TerraUSD’s stablecoin, a freeze in withdrawals by crypto bank Celsius and the crypto-focused hedge fund Three Arrows Capital falling into liquidation.

Bathija said the decision would allow the company — which last month announced it would cut 30 percent of its staff — to explore potential restructuring options, according to the statement.

Nexo said it would provide “immediate assistance and alleviate withdrawal limitations put in place on Vauld’s platform,” according to a Tuesday news release. “The aim is not only to protect Vauld’s existing customer base to the fullest extent possible but also to give them access to an improved range of services.”

The volatility that has gripped the crypto market in recent months may well lead to more consolidation, experts say, allowing larger companies to purchase smaller competitors to enlarge their user bases.

“In times of market turmoil, customers want to withdraw money that isn’t there, because it has been locked up in staking or liquidity operations of third parties or lent out to others for even more dubious schemes,” said Martin Hiesboeck, head of blockchain and crypto research at digital trading platform Uphold. “The reason why other crypto companies, in particular exchanges like Binance or FTX, have an interest in buying them is that they get access to their sometimes sizable user base at a steep discount, thus further improving their market position.”

Nexo made a similar overture last month, when it informed Celsius that it planned to acquire parts or all of its qualifying assets, Coindesk reported. In a blog post, Nexo also announced its intention to engage in a “large-scale consolidation” of the crypto space to aid investors and businesses through the market turbulence.

Hiesboeck sees more change coming for the industry. He says the “current turmoil” in the crypto space isn’t turmoil at all, but rather “the end of crypto Wild West.”

Last week, European Union lawmakers reached an agreement on the proposal called Markets in Crypto-Assets, the first major regulation on cryptocurrency, which would protect investor interest against risks associated with digital assets. If adopted, stablecoins — which are tokens that are pegged against U.S. dollars such as tether — would be required to maintain a large reserve in the event of investor withdrawals.

In Southeast Asia, regulators have started to impose stricter measures on digital assets trading. The Monetary Authority of Singapore released guidelines in January, forbidding crypto companies from advertising their services in public spaces beyond their own website or official accounts. The agency said that such advertising might lead to speculations among investors who did not fully understand the risks involved.

After China banned the majority of crypto-related activities, nearly 200 crypto start-ups attempted to enter the Singapore markets, Bloomberg News reported. A report by technology investment platform White Star Capital found that over 600 crypto and blockchain companies were headquartered in Southeast Asia, with more than $3 billion in venture capital funding amassed in digital assets companies in the area.