By Mohammed Kudrati
A popular cryptocurrency exchange called Vauld, promoted or featured in several videos by Indian YouTube channels, often with more than a million subscribers during the 2021 cryptocurrency price bull run, is now in deep trouble.
The crypto exchange announced that it has halted the withdrawal of funds after facing a cash crunch and has stopped accepting fresh funds as well, while it continues to consult with financial and legal organisations on how to return to normalcy. This situation has prompted it to be a potential acquisition target by Nexo, a British exchange, to enter the Asian market using Vauld as a gateway. On Tuesday, Nexo signed an agreement with Vauld, that gives them a 60-day exclusive exploratory period to acquire it.
In its statement announcing the curbs on July 4, Vauld attributed it to the current downturn in the cryptocurrency market, catalysed by adverse events like the collapse of the 'stablecoin' USDT, the liquidation of crypto hedge fund Three Arrow Capital, and similar curbs on crypto exchange Celsius.
This is Vauld's second indication that it was facing problems, after Darshan Bathija, its CEO, wrote a blog announcing job cuts - to the tune of 30% - in June.
Both Vauld and Nexo are exchanges, or rather crypto-fintech companies, who offer similar services: mimicking banks.
These exchanges offered the core services that banks did - term loans and interest-bearing term deposits (like fixed deposits) - but all denominated in cryptocurrency instead of fiat currency like dollars or rupees. Vauld's customers could start something called an 'automatic investment plan' (AIP) to invest in cryptocurrencies on Vauld, starkly resembling the systematic investment plans commonly offered to invest in Indian equity or mutual funds.
Nexo even offers a credit line through plastic-based cards, which lets users spend in real currency, but is secured by crypto assets in their account. Further, despite Vauld being based in Singapore, Indian clients could make deposits and withdraw in Indian rupees.
The pandemic year 2021 saw stocks and cryptocurrencies rally, as global monetary systems remained flush with liquidity to combat the ill effects of the economic fallout that the pandemic unleashed. However, the receding pandemic, heightened inflation and rising global interest rates have led to a rout in financial markets, including cryptocurrencies, with several advanced economies in the world being on the brink of a recession, which is likely to set in in the next 12 months, according to Nomura.
Watch: Cryptocurrencies In Free Fall: What Is Going On?
The YouTube connection
Vauld's popularity in India also soared due to promotions done by influencers who featured them on their YouTube channels.
Akshat Srivastava, a YouTuber creator, has a video portfolio explaining cryptocurrencies, and related concepts like tokens, stablecoins and equity. His channel has 1.1 million subscribers. Further, he has also made several videos for Vauld's own YouTube page. At the time of writing this story, Srivastava was addressing the curbs on Vauld through a YouTube live.
Ankur Warikoo, a digital influencer who discusses entrepreneurship, finance and investment, made a YouTube video in October 2021 discussing how he uses Vauld for bitcoin-based fixed deposits. In the video's description, he states that he would not have otherwise invested in a fixed deposit because, but did so through Vauld as it was crypto-denominated. Warikoo too has posted what he has received from Vauld, stating that he has capital stuck with them.
At 8:21am on July 4th 2022, I received an email from Darshan, the CEO of Vauld. Due to the volatile nature of the crypto market, Vauld has decided to pause all withdrawals, trading and deposits. Which means our monies are stuck for now. This is extremely unfortunate and not something I would have wished for, when I worked with Vauld. As all of us (that includes me - Even my money is with Vauld) wait to see what happens next, I hope you all invested wisely In crypto to no More than 5-10% of your total portfolio, as I have mentioned always.
Ankur Warikoo on YouTube
PR Sundar, who has a YouTube channel with 9.45 lakh subscribers, did a video with Bathija, where the latter outlined Vauld's services, especially its fixed deposit services. Sundar largely discusses the market, with Bhatija discussing the platform and features. The video has more than 1.9 lakh views.
Booming Bulls, a YouTube channel with 1.07 million subscribers, made a walkthrough on how to make AIPs using Vauld. He explains that the payment could be made using dollars or USDT (which is pegged to the dollar at a one-to-one exchange rate) in either one cryptocurrency or a basket of them. After Vauld halted withdrawals, the creator said in a separate video that his funds too are stuck with the company, and he hoped for a speedy resolution.
Also Read: Falling For Elon Musk Crypto Scam: Tale Of A 22 Year Old From Kashmir
