- Creditor protection is extended for cryptocurrency lender Vauld until February 28.
- In comparison to the requested April 21, the extension is shorter.
The Singapore Court recently extended creditor protection for Vauld, a digital asset lending platform, after its deal with Nexo fell through. This ruling has significant implications for the digital asset lending market and highlights the need for proper regulatory oversight in this rapidly growing industry.
Vauld, a company that provides loans backed by digital assets, filed for creditor protection in 2020 as a result of liquidity problems. The business has a contract with Nexo, a different loan platform for digital assets, for a future acquisition. Vauld was unable to pay its creditors back after the agreement fell through. By February 28th, the company needs to formulate a recovery strategy.
According to media reports from January 17, Vauld has been given more than a month to conclude talks with one of two digital asset fund managers in order to assume executive control of the coins that are currently locked on its platform. It appears that the company’s assertion that the negotiations have reached an advanced level was accepted by the Singapore high court.
The platform stopped processing withdrawals for its 800,000 users in July 2022 due to poor market conditions and an abnormally high volume of $200 million in withdrawals in less than two weeks. It was already given a three-month moratorium in August 2022 to create a restructuring strategy for the company and better serve its creditors. The judge at the time rejected the company’s demand for a six-month protection period, expressing worries that a longer moratorium wouldn’t gain enough oversight and control.
It was known that Nexo, a crypto lender with its headquarters in Switzerland, intended to buy Vauld and all of its assets from the start of the first moratorium. Vauld denied the existence of this contract, nevertheless, following a police raid on Nexo’s own office in Bulgaria.
The Singaporean government has already shown that it is willing to allow struggling crypto firms to resolve their issues. In August 2022, a three-month moratorium was granted to Zipmex, a significant Singapore-based platform, to address liquidity concerns. However, the future of crypto lending in the nation is still up in the air since Singapore’s central bank has proposed prohibiting digital payment token service providers from providing customers with any credit facility, including both fiat currency and cryptocurrencies.
In summation, the Singapore Court’s decision to prolong Vauld’s creditor protection is a step in the right direction toward bringing more stability and predictability to the market for lending on digital assets. In this quickly expanding industry, it also serves as a reminder of the significance of effective regulatory control. The episode emphasizes the necessity for appropriate regulation to safeguard investors and stop similar events from happening in the future; ensuring the market for lending on digital assets grows sustainably.
Source: https://www.thecoinrepublic.com/2023/01/22/vaulds-creditor-protection-extended-singapore-courts-response-to-failed-nexo-deal/