Cryptocurrency lender Vauld paused all trading, withdrawals and deposits on its platform, becoming the second major firm to take measures against the turmoil in the crypto market.
"The Vauld management wishes to inform that we are facing financial challenges despite our best efforts. This is due to a combination of circumstances such as the volatile market conditions, the financial difficulties of our key business partners inevitably affecting us," the Singapore-based crypto platform said on Monday in a blog post.
The company said the current crypto market climate has led customers to make withdrawals of over $197 million since June 12.
Meanwhile, Nexo, another crypto lender, announced on Tuesday that it has made an offer to buy Vauld.
The company said it signed an indicative term sheet with Vauld that grants Nexo a 60-day exclusive exploratory period related to its intended acquisition.
London-based Nexo said it plans to acquire up to 100% of Vauld, if the transaction is completed successfully, and reorganize its future operations with an aim of deeper presence in Asia.
"The current market conditions are to a large degree reminiscent of the Bank Panic of 1907, characterized by excessive leverage in the system, an overabundance of companies in trouble, and no lender of last resort," Nexo said in a statement.
The crypto market has been in turmoil since mid-June amid the collapse of the controversial stablecoin UST.
On June 13, another crypto loan firm Celsius Network paused all withdrawals, swaps, and transfers between user accounts due to extreme market conditions. Late last month, crypto hedge fund Three Arrows Capital defaulted on loans.
"Specific arrangements will be made for customer deposits as may be necessary for certain customers to meet margin calls," Vauld said on Twitter on Monday.
"We intend to apply to the Singapore courts for a moratorium i.e. a suspension of the commencement or continuation of any proceedings against the relevant companies so as to give us breathing space to carry out the proposed restructuring exercise," it added.
The price of Bitcoin, the world's biggest crypto by market size, dove below the $19,000 level last Thursday once again, retesting the critical support level that was seen on June 18. It stood around $19,500 on Tuesday.
While the total value of the crypto market was at $882 billion, it is significantly down from the $3 trillion market cap that was recorded in November.
El Salvador, which became on June 2021 the first country to adopt Bitcoin as legal tender, continues to buy as President Nayib Bukele wrote Friday on Twitter "El Salvador bought today 80 #BTC at $19,000 each!"
