MintGenie Explainer: What exactly is the Vauld issue and how does it impact you?
Premium- Vauld said that the suspension of withdrawals was the result of massive customer withdrawals amounting to over $197.7 million since June 12, 2022.
As one percent TDS came into force from July 1 onwards, several crypto investors have become too dissuaded to invest their money, or at least the data shows this. No prizes for guessing then the trading volumes at several Indian crypto exchanges have dropped sharply.
Co-founded by Darshan Bathija, Singapore-based crypto platform Vauld recently suspended its withdrawals, trading and deposits.
The news of pausing of withdrawals followed an announcement recently that Vauld was firing 30 percent of its staff last month.
What went wrong?
Vauld said that the suspension of withdrawals was the result of massive customer withdrawals amounting to over $197.7 million since June 12, 2022.
The company on Tuesday announced that there could be a solution in sight as Nexo, lender in digital finance space, starts the process to acquire Vauld.
"I understand that a lot of our customers are nervous about your funds. We are working tirelessly to ensure your financials are protected. To that end, we've signed an indicative term sheet with Nexo to acquire up to 100% of Vauld," said Darshan Bathija in a statement issued on Tuesday.
About Vauld discontinuing the withdrawals, Gaurav Mehta, Founder of Catax, says: "It illustrates the sorry state of affairs in India, where fintech innovation and risky endeavours are shielded by corporate restructuring abroad and Indian customer’s investments is a mercy for foreign companies."
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What can investors do now?
This sudden move caught a number of investors unaware. Puneeth-K, one of the user on reddit, a social news discussion portal, said, “Learnt my lesson after losing lakh worth of coins on a good day (seems so long ago now) but never again falling for advices from YouTubers they are just cynics aiming to make cash,"
Another one that goes by the name Koal2 says: "So we won't get any money back?"
On this, Vauld says that investors need to be understanding and patient for some time. If some customers have a query, they can send them to enquiries@ vauld.com.
The company says that specific arrangements will be made for customer deposits as may be necessary to meet margin calls.
“We seek your understanding and patience in the meantime. Should you have any queries, please submit them at enquiries@vauld.com. We will endeavour to address them as soon as practicable," a Vauld statement says.
Why are investors exiting crypto markets?
Most Indian crypto exchanges have witnessed noticeable decline in their volumes soon after the 1% TDS came into effect. This means for every purchase, they need to earmark one percent of their price and pay as tax. This was seen to impact adversely the overall crypto market.
According to the data shared by CREBACO, a crypto research firm, the trading volumes have dropped by as much as 72.5 percent for WazirX, while other crypto exchanges witnessed the volumes sliding by anywhere between 29 percent to 41 percent in mere four days.
This story first appeared on MintGenie and can be accessed here.