Vauld User Funds: What Next If Exchange Gets Liquidated?

As the management of Vauld is trying to figure out a solution to the ongoing crisis, several users are anxious. The individual investors are doubtful as to what it could mean to them in future.

Vauld User Funds: What Is The Priority

Meanwhile, it appears that user funds could be prioritized above venture capitalists, if the company goes for liquidation process. When the company’s audit begins by calculating assets and liabilities, Vauld could then start to return the liabilities.

On Mondy, Vauld said in an announcement that it is facing financial challenges owing to the volatility in the market. This is due to a combination of circumstances such as the volatile market conditions and the financial difficulties of our key business partners. Also, the current market climate led to a significant amount of customer withdrawals, it stated.

The withdrawals amounted to excess of $197.7 million since 12 June 2022 when the decline of the cryptocurrency market was triggered by Terra crash. Following this was further damage due to Celsius network pausing withdrawals, and Three Arrows Capital defaulting on their loans.

What’s Next For Users?

Other factors like India’s high taxation which became effective starting this month have also caused more damage to Vauld’s prospects recently. Other Indian exchanges are also facing the heat amid concerns of Vauld user funds. Already, trading volumes in the country’s exchanges have come down drastically.

The individual users, however will be followed by secured and preferred creditors of Vauld, as per standard liquidation practices. The customers come under the category of unsecured creditors. After paying off outstanding liabilities to the secured and preferred creditors, the unsecured creditors will be preferred.

The news of Vauld suspending withdrawals, trading and deposits on its platform came as a shocker to the crypto ecosystem. This resulted in increased voices to protect individual funds from the crypto exchanges, where the assets are unsecured.

Since the announcement, there was no further update on the situation from Vauld management. The management said it would provide any update on material developments “at the appropriate juncture.” We seek your understanding and patience in the meantime, it added.