Singapore-based crypto exchange Vauld has won court approval to revamp its board of directors. Announced by co-founder Darshan Bathija on X, formerly Twitter, the new board will feature a fresh CEO, a creditor representative, and a scheme manager. This move is pivotal in the company’s ongoing bankruptcy proceedings, which commenced in August 2022.
Moreover, Vauld has restarted its Know Your Customer (KYC) checks for existing clients. Customers are now required to resubmit verification documents. This action comes on the heels of a $46.4 million seizure by Indian law enforcement from Vauld’s Indian subsidiary, Flipvolt Technologies, last year. The authorities cited allegations of money laundering as the reason for the seizure.
However, Vauld’s troubles started even before the legal entanglements. In July 2022, the company halted customer withdrawals, blaming unfavorable market conditions. A subsequent two-week “bank run” saw a staggering $200 million withdrawn from the platform. The company attributed this massive outflow to the falling prices of major cryptocurrencies and its risky exposure to TerraUSD (UST), a stablecoin that tanked in May 2022.
Additionally, Vauld secured a three-month moratorium in August 2022 to formulate a restructuring plan. Initially, Swiss crypto lender Nexo appeared as a potential acquirer. Yet, talks between the two firms fizzled out in January 2023. Consequently, Vauld received another round of creditor protection from a Singapore court in the same month, extended further in February.
Significantly, Vauld owes around $400 million to its creditors, most of whom are individual depositors. The court’s recent decision to allow board restructuring could be a turning point in the company’s bailout process. As the new board takes charge, all eyes are on how they will steer the company out of its financial mess.
Hence, while the court’s approval offers a glimmer of hope for beleaguered investors, the path to recovery is fraught with obstacles. With a colossal debt still looming, the new management faces the daunting task of restoring investor confidence and financial stability. As the board navigates these choppy waters, the future of Vauld and its investors hangs in the balance.