Lending

Keys lost in the Vauld: Singapore crypto exchange freezes withdrawals

Not your keys, not your coins. Crypto CeFi lender Vauld has suspended “all withdrawals, trading and deposits.”

Crypto contagion claims another casualty. In a statement, Singapore-based crypto exchange Vauld has made the “difficult decision to suspend all withdrawals, trading and deposits on the Vauld platform with immediate effect.”

In what appears to be a run on the crypto bank, the group intends to “apply to the Singapore courts for a moratorium,” as Vauld customers have tried to withdraw an “excess of a $197.7 million since 12 June 2022.”

The decision to suspend withdrawals is a screeching U-turn. Reportedly, Vauld boasted $1 billion assets under management in May this year, while on June 16, a company email stated that business would “continue to operate as usual.” Just 18 days later, the company is exploring “potential restructuring options.”

On June 21, CEO Darshan Bathija tweeted that Vauld had cut its team by 30% — the first sign that the company was under duress. Separately, Bathija also stressed that Three Arrows Capital (3AC) was an early investor in the company, but had exited in late 2021.

The statement from Vauld suggests that “volatile market conditions, the financial difficulties of our key business partners inevitably affecting us, and the current market climate” were reasons behind their decision to freeze customers’ money.

Nonetheless, 3AC’s demise is cited and considered a significant contributor to capitulation among centralized finance (CeFi) companies. 3AC had substantial exposure to Luna Classic (LUNC), which blew up in spectacular fashion, reducing 3AC’s holdings from $560 million to $670. 

Indeed, Vauld follows in the footsteps of large CeFi platforms such as Celsius, Voyager and BlockFi. Voyager explicitly blamed 3AC for their recent decision to freeze customers’ funds and BlockFi is close to a $240 million deal with FTX following financial difficulties, while plans to salvage Celsius from bankruptcy were recently shared by lead investor BnkToTheFuture.

For crypto investigative journalist Otterooo, Vauld’s strife is more motivation for investors to hold their own keys. Holding onto one’s private keys is a guiding principle of crypto investing: If you do not hold your own keys, you do not own your coins.

As Cointelegraph reported in a March 2021 press release, Vauld boasted double-digit interest rates on popular stablecoins such as Tether (USDT) and Dai (DAI), while Bitcoin (BTC) interest could reach 7.23%. In effect, in “lending” your cryptocurrency tokens to Vauld, you would generate a yield. However, the company effectively owns your assets.

Vauld’s interest rates from March 2021. Source: Vauld

The rates were competitive with lenders and interest bearers such as Celsius, BlockFi and Nexo — one of which continues to function. Nexo tweeted that there may be delays to customer transactions due to Independence Day in the United States. 

BlockFi announces deal with FTX US, including ‘option to acquire’ for $240M

According to CEO Zac Prince, BlockFi signed agreements with FTX US totaling $680 million — for a company that had a $5 billion valuation in June 2021.

FTX US has inked a deal with BlockFi that will give the crypto derivatives exchange the option to purchase the lending firm.

In a Friday Twitter thread, BlockFi CEO Zac Prince said the crypto lending firm had signed agreements with FTX US for a $400-million revolving credit facility as well as the option to acquire BlockFi “at a variable price of up to $240 million based on performance triggers.” According to the CEO, the deal was reached as part of an effort “to bolster liquidity and protect client funds” at BlockFi.

The agreements are still subject to shareholder approval. Prince said volatility in the crypto market, “particularly market events related to Celsius and 3AC,” which had a negative impact on BlockFi, led to the decision. The crypto lending platform suffered roughly $80 million in losses the week following Celsius pausing withdrawals, and, after considering “​​various unattractive options” for recovery, partnered with FTX US.

“All of our products and services — including funding and withdrawals, our trading platform, credit card and global institutional services — continue to operate normally, with incremental capital strength behind them,” said Prince.

In a Friday blog post, BlockFi criticized reports from Thursday claiming FTX intended to purchase the firm for $25 million. According to the CEO, the $400 million credit facility, $240 million acquisition price and “other potential consideration” totaled $680 million — for a company that had a $5 billion valuation in June 2021. Prince hinted the report was due to “an inappropriately leaked call” and “purely personal conjecture by a single party.”

Related: FTX US acquires Embed Financial subsidiary for stock trading platform

BlockFi was one of the first firms to liquidate some of Three Arrows Capital’s positions in June after the company reportedly failed to meet margin calls from its lenders. Amid the market downturn and extreme price volatility, the crypto lending firm announced that it would be laying off 20% of its 850-strong staff, retaining roughly 600 people. It’s unclear if a FTX US acquisition would change this decision.

British Virgin Islands court reportedly orders to liquidate 3AC

The order reportedly came on the same date that Voyager Digital issued a notice of default to 3AC for its failure to pay its 15,250 Bitcoin and 350 million USDC loan.

Troubled cryptocurrency venture capital firm Three Arrows Capital (3AC) is facing more uncertainty amid new reports on the company’s liquidation.

A court in the British Virgin Islands ordered the liquidation of Singapore-based 3AC on Monday, the British news agency Sky News reported on Wednesday.

The information in the report refers to an unspecified person familiar with the matter. Three Arrows Capital did not immediately respond to Cointelegraph’s request for comment.

Three Arrows Capital, also known as 3AC, is a Singaporean crypto hedge fund founded in 2012 by Kyle Davies and Su Zhu. The firm has reportedly failed to meet margin calls from its lenders amid a massive market downturn this year, with Bitcoin (BTC) dropping below $20,000 for the first time in two years. 3AC reportedly borrowed BTC From crypto lending firm BlockFi but was unable to meet a margin call due to the bear market.

The VC firm was estimated to have incurred $400 million in liquidations across multiple positions.

While the reports triggered rumors about 3AC’s insolvency, the company’s founders continued to assure customers that they will do their best to find an equitable solution. The firm hired legal and financial advisers to explore solutions like asset sales and a rescue package by another firm, Davies said. “We have always been believers in crypto and we still are,” he added.

Related: Crypto lending can still survive bear market, analyst says

The news comes shortly after the crypto exchange Voyager Digital issued a notice of default to 3AC for its failure to pay its 15,250 BTC and 350 million USD Coin (USDC) loan.

State securities regulators investigate Celsius over withdrawal suspension: Report

Reports from different media outlets in the last week also suggested the Celsius Network has lost major backers and onboarded new attorneys amid a volatile crypto market.

Securities regulators from five U.S. states have reportedly opened an investigation into crypto lending platform Celsius Network over its decision to suspend user withdrawals.

According to a Thursday report from Reuters, Texas State Securities Board director of enforcement division Joseph Rotunda said regulators in Alabama, Kentucky, New Jersey, Texas and Washington began investigating Celsius after the platform announced it would be “pausing all withdrawals, swaps and transfers between accounts.” Rotunda reportedly called the investigation a “priority” for the Texas regulator and confirmed to Cointelegraph the enforcement division was “looking at the issue involving the frozen accounts.”

“I am very concerned that clients — including many retail investors — may need to immediately access their assets yet are unable to withdraw from their accounts,” the enforcement director reportedly said. “The inability to access their investment may result in significant financial consequences.”

The report on a possible investigation into Celsius followed a Wall Street Journal report from Thursday that two firms that habacked the crypto lending platform during a November 2021 funding round did not plan to provide additional funds due to the potential risks, citing people with knowledge of the situation. WestCap Group and Canadian pension fund Caisse de dépôt et placement du Québec led a $750 million Series B funding round for Celsius, which helped the platform reach a $3.5 billion valuation.

With the crypto market experiencing significant volatility in June, Celsius has reportedly onboarded attorneys to find different solutions to the current financial challenges faced by the company. CEO Alex Mashinsky took to Twitter on Wednesday — breaking a three-day social media silence — to say that the Celsius team was working “non-stop” to address user concerns.

The Texas State Securities Board also took action against Celsius in September 2021, initially scheduling a hearing related to allegations that the network had offered and sold securities in the state that were not registered or permitted, in addition to the platform not registering as a dealer under Texas’ Securities Act. The New Jersey Bureau of Securities issued a cease and desist order against Celsius for similar alleged violations of the state’s securities laws.

Related: SEC chair warns about ‘too good to be true’ returns amid market downturn

Major cryptocurrencies including Bitcoin (BTC) and Ether (ETH) have dipped close to $20,000 and $1,000, respectively, in the last seven days amid extreme market volatility. Possibly in response to these losses, many crypto exchanges have announced staff cuts between 5%–20%, including Coinbase, Gemini and Crypto.com.

Cointelegraph reached out to Celsius Network, but did not receive a response at the time of publication.

NEXO price drops 40% in three days on contagion fears from ‘insolvent’ crypto fund

Nexo says it currently has no exposure to Three Arrows Capital and has 100% liquidity to meet its debt obligations.

The price of Nexo (NEXO) continued to fall on June 15 as crypto lending firms continue to be shaken by the falling cryptocurrency market.

Meanwhile, Nexo has denied rumors of exposure to Three Arrows Capital (3AC), a Dubai-based crypto fund facing insolvency risks.

NEXO price suffers on DeFi contagion fears 

NEXO, which serves as a security token at a cryptocurrency lending platform of the same name, fell nearly 25% to $0.61 a unit, its lowest price reading since January 2021.

The massive intraday decline came as a part of a broader downside move this week, which stretched NEXO’s losses to 40%.

NEXO/USDT weekly price chart. Source: TradingView

An ongoing contagion in the crypto lending sector contributed to NEXO’s underperformance.

Traders fear that most decentralized finance (DeFi)/centralized finance (CeFi) firms, which offer high yields to clients on their cryptocurrency deposits, will default on their debts due to the wipeout of nearly $1.5 trillion from the crypto market in 2022. 

The concerns continue to mount after the collapse of Terra (LUNA) — now known as Luna Classic (LUNC) — a $40 billion algorithmic stablecoin project, in May.

A month later, Celsius Network, which offers clients up to 18% yields, paused withdrawals due to “extreme market conditions.” Its clients have pulled almost half of their assets out of the platform since October 2021, thus leaving it about $12 billion as of May 17 to meet debt obligations.

Meanwhile, 3AC, a crypto hedge fund, has witnessed liquidations of at least $400 million. In addition, on-chain data reveals that the firm may also have a minimum debt of $183 million against a collateral position of $235 million (derived in Staked Ether).

The fund could transfer the economic risks to its lenders if it becomes insolvent.

“The lenders will bear the PnL [profit and loss] difference between how much they are owed versus what they get in liquidating their collateral,” noted Degentrading, a market commentator known for highlighting the Celsius Network’s liquidation issues.

He added:

“That means defaults will cause SIGNIFICANT EQUITY erosion […] Not all lenders are made equal. Celsius is the worst. It has gone under. Nexo, I don’t know. BlockFi is pretty bad as well.”

However, Nexo says it currently has no exposure to 3AC despite partnering with the fund over a nonfungible token (NFT) lending product in December 2021. The firm asserts that the partnership with 3AC did not take off.

What’s next for the NEXO token?

Nexo has 100% liquidity to meet its $4.96 billion worth of debt obligations, according to U.S.-based audit firm Armanino. That raises the firm’s potential to avoid a liquidity crisis in the event of a rising withdrawal rate, unlike Celsius.

Nonetheless, NEXO price treads ahead under persistent bearish risks, primarily due to the crypto market’s dire state in a high-interest rate environment. The NEXO/USD pair now eyes the $0.58–$0.69 range as its interim support due to its historical significance from December 2020 to January 2021.

NEXO/USD weekly price chart. Source: TradingView

A rebound from the $0.58–$0.69 range could have NEXO bulls eye $0.883 as their interim upside target. This level was instrumental as support during the early-May price crash; it now coincides with the 0.786 Fibonacci retracement graph drawn from the $0.11-swing low to the $3.71-swing high.

Related: Is the bottom in? Raoul Pal, Scaramucci load up, Novogratz and Hayes weigh in

Conversely, a decline below the $0.58-$0.69 range could have NEXO watch December 2020’s support level near $0.43, down around 35% from June 15’s price.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

DeFi contagion fears and rumors of Celsius and 3AC insolvency could weigh on NEXO price

Nexo says it currently has no exposure to Three Arrows Capital and has 100% liquidity to meet its debt obligations.

The price of Nexo (NEXO) continued to fall on June 15 as crypto lending firms continue to be shaken by the falling cryptocurrency market.

Meanwhile, Nexo has denied rumors of exposure to Three Arrows Capital (3AC), a Dubai-based crypto fund facing insolvency risks.

NEXO price suffers on DeFi contagion fears 

NEXO, which serves as a security token at a cryptocurrency lending platform of the same name, fell nearly 25% to $0.61 a unit, its lowest price reading since January 2021.

The massive intraday decline came as a part of a broader downside move this week, which stretched NEXO’s losses to 40%.

NEXO/USDT weekly price chart. Source: TradingView

An ongoing contagion in the crypto lending sector contributed to NEXO’s underperformance.

Traders fear that most decentralized finance (DeFi)/centralized finance (CeFi) firms, which offer high yields to clients on their cryptocurrency deposits, will default on their debts due to the wipeout of nearly $1.5 trillion from the crypto market in 2022. 

The concerns continue to mount after the collapse of Terra (LUNA) — now known as Luna Classic (LUNC) — a $40 billion algorithmic stablecoin project, in May.

A month later, Celsius Network, which offers clients up to 18% yields, paused withdrawals due to “extreme market conditions.” Its clients have pulled almost half of their assets out of the platform since October 2021, thus leaving it about $12 billion as of May 17 to meet debt obligations.

Meanwhile, 3AC, a crypto hedge fund, has witnessed liquidations of at least $400 million. In addition, on-chain data reveals that the firm may also have a minimum debt of $183 million against a collateral position of $235 million (derived in Staked Ether).

The fund could transfer the economic risks to its lenders if it becomes insolvent.

“The lenders will bear the PnL [profit and loss] difference between how much they are owed versus what they get in liquidating their collateral,” noted Degentrading, a market commentator known for highlighting the Celsius Network’s liquidation issues.

He added:

“That means defaults will cause SIGNIFICANT EQUITY erosion […] Not all lenders are made equal. Celsius is the worst. It has gone under. Nexo, I don’t know. BlockFi is pretty bad as well.”

However, Nexo says it currently has no exposure to 3AC despite partnering with the fund over a nonfungible token (NFT) lending product in December 2021. The firm asserts that the partnership with 3AC did not take off.

What’s next for the NEXO token?

Nexo has 100% liquidity to meet its $4.96 billion worth of debt obligations, according to U.S.-based audit firm Armanino. That raises the firm’s potential to avoid a liquidity crisis in the event of a rising withdrawal rate, unlike Celsius.

Nonetheless, NEXO price treads ahead under persistent bearish risks, primarily due to the crypto market’s dire state in a high-interest rate environment. The NEXO/USD pair now eyes the $0.58–$0.69 range as its interim support due to its historical significance from December 2020 to January 2021.

NEXO/USD weekly price chart. Source: TradingView

A rebound from the $0.58–$0.69 range could have NEXO bulls eye $0.883 as their interim upside target. This level was instrumental as support during the early-May price crash; it now coincides with the 0.786 Fibonacci retracement graph drawn from the $0.11-swing low to the $3.71-swing high.

Related: Is the bottom in? Raoul Pal, Scaramucci load up, Novogratz and Hayes weigh in

Conversely, a decline below the $0.58-$0.69 range could have NEXO watch December 2020’s support level near $0.43, down around 35% from June 15’s price.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Iowa regulator orders BlockFi to pay $943K over alleged unregistered securities offering

The IID ordered BlockFi to pay an administrative fine as well as cease and desist “from making any untrue statement of material facts regarding securities.”

The Iowa Insurance Division, or IID, a regulator responsible for many securities sales in the state, has fined crypto lending firm BlockFi more than $943,000 after it allegedly offered and sold unregistered securities.

In a Tuesday announcement, the state regulator said BlockFi had “offered and sold securities in Iowa that were not registered or permitted for sale in Iowa” in addition to not being registered as a broker-dealer or agent, in violation of the state’s Securities Act. The IID ordered BlockFi to pay $943,396.22 as an administrative fine as well as to cease and desist “from making any untrue statement of material facts regarding securities.”

“While innovations, like cryptocurrencies, may provide for growth and evolution in the financial system, it is important that regulators ensure this occurs within an appropriate framework that protects investors while still facilitating responsible capital formation,” said Iowa nsurance commissioner Doug Ommen.

The order behind the financial penalty was part of an investigation by the United States Securities and Exchange Commission, or SEC, in which BlockFi was ordered in February to pay $50 million in settlement to the federal agency as well as $50 million to 32 state-level regulators. According to the IID, BlockFi allegedly made “misrepresentations and omissions about the level of risk in its loan portfolio” and claimed its institutional loans were “typically” over-collateralized when the statement was only true for 17% of loans made by the platform in the first half of 2021.

“BlockFi’s statements that their loans were “typically” over-collateralized suggested to investors that they had secured more protection from default than BlockFi had actually secured,” said the IID.

Federal and state regulators seemed to target many crypto lending platforms in 2021, with the New York Attorney General’s office ordering two firms to “cease any and all such activity” while potentially investigating three others. Financial regulators from a number of U.S. states, including Texas, New Jersey, Alabama, Kentucky and Vermont, claimed in 2021 that BlockFi had offered securities unlicensed at the state or federal level.

Related: Happy to be regulated? Fallout from BlockFi settlement is a matter of speculation

BlockFi CEO Zac Prince announced on Monday that the firm would be laying off 20% of its staff — reducing the number of employees to just over 600 — citing the need to achieve profitability goals. It’s unclear whether the financial penalties from state regulators played a role in BlockFi’s decision, but the news came amid the crypto market experiencing extreme volatility, with the price of Bitcoin (BTC), Ether (ETH) and many others dropping between 25–40% in the last seven days.

Ethereum price flash crashes to $950 on Uniswap as whale dumps 93K ETH

ETH managed a sharp rebound after falling to $950. But the ETH/USD bearish continuation setup could have it revisit it.

Ethereum’s native token Ether (ETH) fell to as low as $950 on Uniswap—a decentralized crypto exchange— this June 13, about 20% lower than its spot rate across other exchanges.

ETH/USD hourly price chart. Source: Uniswap

Over $130M ETH sold in six hours

The incident happened at around 3:00 am UTC after a whale dumped 65,000 ETH for multiple “stablecoins,” including USD Coin (USDC), Tether (USDT) and Dai (DAI).

A piece of evidence noted that the whale sold its ETH holdings to pay off nearly $73 million worth of debt at Oasis.app, a DeFi lending platform. The duration of the sell-off saw ETH’s liquidation price dropping from $1,200 to $875.

The Oasis borrower continued the selling spree—dumping another stash of nearly 28,000 ETH five hours after the first selloff—to pay back another $32 million in debt. This time, the liquidation price rose from $892 to $1,200, as shown below.

Screenshot of the anonymous borrower’s dashboard. Source: Oasis.app

As a result, the whale dumped around 93,000 ETH within just six hours. The amount equals toroughly $112 million at June 13’s ETH/USD price.

Interestingly, the Oasis borrower’s total outstanding debt was about $120 million (as measured in DAI stablecoin), suggesting that the whale suffered heavy “slippage” losses.

Ether price eyes $667 — veteran analyst

Ether’s trip to $950 was brief, suggesting adequate demand for the tokens near the level. Nonetheless, one separate analysis from veteran trader Peter Brandt pointed at ETH’s price falling toward $650 in the coming weeks.

Brandt’s bearish outlook emerged out of a classic continuation pattern, dubbed the “descending triangle,” which resolves after the price breaks out in the direction of its previous trend.

Since Ether was falling before the triangle’s formation, its path of least resistance was skewed to the downside.

ETH/USD daily price chart. Source: Peter Brandt/TradeNavigator

Brandt says that ETH had reached the triangle’s first downside target of $1,268 as the price declined 20% on June 13. He anticipates the declines to continue, with ETH dropping almost by another 50% to $667.

Nonetheless, Ether’s oversold relative strength index (RSI) could lead to a sharp price reversal. Ethereum picks additional rebound cues from its 200-week simple moving average (200-week SMA; the orange wave in the chart below) near $1,200, now serving as support.

ETH/USD weekly price chart. Source: TradingView

If ETH price undergoes an upside retracement, then the token’s interim bull target could be near $1,450, coinciding with the 1.00 Fib line of the Fibonacci retracement graph drawn from around $1,450-swing high to the $84-swing low.

Related: Celsius exodus: $320M in crypto sent to FTX, user withdrawals paused

Conversely, a decisive close below the 200-week SMA could have ETH eye $920 as its next downside target.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

TrueFi launches on Optimism, expanding access to on-chain credit

Several projects have launched on Optimism this year with the goal of giving users instant transactions and lower gas fees.

Unsecured lending protocol TrueFi has become the latest project to launch on Optimism, Ethereum’s popular layer-2 scaling solution, in a move that’s expected to boost demand from non-institutional lenders. 

By launching on Optimism, TrueFi’s lender community will have access to a faster and cheaper user experience, as well as gain exposure to a wider pool of retail lenders. “TrueFi users can now lend, borrow and launch portfolios on Optimism to enjoy dramatically reduced transaction costs and network speeds,” Rafael Cosman, co-founder of TrustToken, told Cointelegraph in a written statement. He further explained:

“Since Optimism transactions are on average 77x cheaper than Ethereum, we expect greater adoption from non-institutional lenders, hopefully increasing global access to TrueFi’s financial opportunities.”

TrueFi was built by stablecoin operator TrustToken and shipped to institutional clients in November 2020. In February, TrustToken launched a new lending marketplace on TrueFi designed to give financial institutions the ability to design and launch their own financial products.

Related: Balancer launches on Ethereum L2 network Optimism

There are currently over 40 protocols deployed on Optimism, a sign that more projects were looking to take advantage of improved functionalities such as higher scalability and lower fees. Optimism has been designed to support all decentralized applications running on Ethereum via Optimistic Rollups, a scaling solution that operates in tandem with Ethereum’s main chain.

TVL on Optimism appears to be bucking the general downtrend in DeFi. Source: DeFi Llama

With more projects deploying on Optimism, the chain’s total value locked, or TVL, has spiked over the past week. Currently, network TVL is over $369 million, which is an increase of nearly $100 million since May 29. Network TVL peaked in late April above $510 million.