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Crypto Platform Vauld Suspends Withdrawals, Trading Amid 'Financial Challenges' (techcrunch.com) 91

Posted by msmash from the how-about-that dept.
Vauld, a Singapore-headquartered crypto lending and exchange startup, has suspended withdrawals, trading and deposits on its eponymous platform with immediate effect as it navigates "financial challenges," it said Monday. From a report: The three-year-old startup -- which counts Peter Thiel-backed Valar Ventures, Coinbase Ventures and Pantera Capital among its backers and has raised about $27 million -- said it is facing financial challenges amid the market downturn, which it said has prompted customer withdrawals of about $198 million since June 12. Vauld enables customers to earn what it claims to be the "industry's highest interest rates on major cryptocurrencies." On its website, Vauld says it offers 12.68% annual yields on staking several so-called stablecoins including USDC and BUSD and 6.7% on Bitcoin and Ethereum tokens.
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Crypto Platform Vauld Suspends Withdrawals, Trading Amid 'Financial Challenges' More

Crypto Platform Vauld Suspends Withdrawals, Trading Amid 'Financial Challenges'

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  • no regulations is bad mkay! (Score:3)

    by Joe_Dragon ( 2206452 ) on Monday July 04, 2022 @10:48AM (#62672126)

    no regulations is bad mkay!

    • but it's the price you pay for keeping the gubbermints hands off crypto Bro!
    • When someone proudly boasts about how "they are not a bank", run away. See: "Buy Here Pay Here" car dealerships, "Payday loan" lenders, yield-generating "crypto platforms" etc

      If you want to play the "no regulations" game, the foolproof way is to have your own crypto wallet and take care of it, just like Satoshi Nakamoto envisioned it. That said, I wouldn't lump "non-yield" platforms like Coinbase together with "yield platforms" like Celcius (or the one in the article), so I haven't yet formed a consisten

      • When someone proudly boasts about how "they are not a bank", run away. See: "Buy Here Pay Here" car dealerships, "Payday loan" lenders, yield-generating "crypto platforms" etc

        PayPal is upset you didn't mention them.

      • Gold bricks are currently at $632,071. Do you believe a personal crypto wallet is an equivalent investment?
        • You also need to buy a safe to keep the gold brick somewhat safe. But anyway, it's irrelevant. My point is: Gold or cryptocurrency doesn't magically generate yield by just sitting there. This means that all those "yield-generating" crypto platforms are loaning it out or trading it.

  • wow (Score:4, Insightful)

    by shentino ( 1139071 ) <shentino@gmail.com> on Monday July 04, 2022 @10:54AM (#62672140)

    This is a classic case of a panicky market causing a run on the bank.

    You know, the whole reason we created the FDIC?

    And bear in mind, readers, that the Federal Reserve and the FDIC are two separate federal entities even though they are both federally created.

    • The sad truth is: there are a whole lot of people who haven't had the education they need in order to recognize facts like this before investing in crypto.

      Everyone is born stupid. Everything we know has to be learned. Those who have not learned are vulnerable to scams. It's that simple.

      • Re:wow (Score:4, Insightful)

        by tekram ( 8023518 ) on Monday July 04, 2022 @11:06AM (#62672170)

        ..they need in order to recognize facts like this before investing in crypto.

        It is misnomers like this that allowed the cryptos to flourish - the fact is trading cryptos should never be called 'investing' - it is called speculating and if the term is used correctly either by regulation or in solicitations, there would be no doubt that cryptos are get rich quick schemes that most speculators are likely to lose. Even highly reputable sites make the mistake and allowed newbie speculators to lose mostly all in the end.

      • I'd argue that there is a difference between being stupid and simply being ignorant.

        Don't get me started on whether education is producing those idiots on its watch in the first place.

    • These things are NOT banks. Repeat after me. NOT BANKS.
      • I'd hoped mentioning the FDIC as a point of contrast would have made it obvious that was my point

    • Re:wow (Score:4, Insightful)

      by ThePyro ( 645161 ) on Monday July 04, 2022 @11:11AM (#62672184)

      Except with a bank we know they don't have everyone's money. They loan it out to earn interest, and interest payments fund the bank's operational costs.

      Crypto exchanges aren't supposed to be loaning out customer funds, or using customer funds to pay their workers. Transaction fees keep them afloat. So when an exchange is forced to halt withdrawals it looks really bad; there are multiple examples of exchanges running out of money because of fraud.

      • Re:wow (Score:4, Insightful)

        by kurkosdr ( 2378710 ) on Monday July 04, 2022 @12:08PM (#62672332)
        When a crypto "platform" gives yield, you can bet your arse they are loaning customers' crypto out or trading it. Crypto by itself doesn't magically generate yield in the same way that a gold brick tossed into a vault doesn't magically generate yield. It may go up or down in value in relation to USD, but magically generate yield it doesn't.

        So, long story short, if some crypto "platform" promises yields, they are supposed to loan customer's crypto out or trade it, and an admission that this will happen is typically hidden deep in the terms of service. Also, transaction fees keep the lights on but are insufficient to generate yield. And even if they did (let's assume a platform imposes huge transaction fees, which would risks dooming them to irrelevance, but let's assume), transaction fees are not a stable source of revenue while the promised yields these platforms promise to give out are supposedly stable.

        • Re: (Score:2)

          by mestar ( 121800 )

          And even if they are legit, they just lend to the other Crypto lenders, and it all ends up inside some ponzies that are at the bottom.

        • Re: (Score:1)

          by rgmoore ( 133276 )

          When a crypto "platform" gives yield, you can bet your arse they are loaning customers' crypto out or trading it.

          Or, more likely given the crypto landscape, they're a Ponzi scheme. It's incredibly easy to set up Ponzi schemes when the central idea of cryptocurrency is to avoid any kind of regulation.

          • A Ponzi scheme is a specific type of scheme where the assets aren't invested at all. Assets entering the scheme from the new folks are used to pay fake yield to any old folks withdrawing. In plain English, it's entirely possible to have a "crypto platform" lose your crypto by simply doing degenerate trades and making risky loans with your crypto without ever pulling a Ponzi.

            • Re: (Score:1)

              by rgmoore ( 133276 )

              I appreciate that not all problems with crypto are because of Ponzi schemes, but it's something that we need to keep in mind as a possibility. A lot of the crypto businesses that are having problems right now have at least some of the signs of Ponzi schemes [investor.gov]: unreasonably high and consistent promised returns, everything happening through an unregulated process, and companies that are opaque about exactly where the returns are supposed to come from. Sure, that isn't proof, but when the warning signs are the

      • Crypto exchanges aren't supposed to be loaning out customer funds, or using customer funds to pay their workers.

        I imagine they're using them to "expand the business", ie. Buy some nice offices, fancy company cars, cover the hard-working CEOs dinner and golf expenses, send him on vacation when he overdoes it, etc.

        • Even if they don't do any of that, 12.5% yield is well into high-risk territory, so those platforms have to make risky loans or perform risky trades to get their customers the promised yield. Which means a high risk of those moves backfiring. But some of the customers on those platforms somehow thought their capital was safe. Isn't marketing beautiful? (especially when you don't have too many regulations to deal with, tee hee)

      • Except with a bank we know they don't have everyone's money. They loan it out to earn interest, and interest payments fund the bank's operational costs.

        Crypto exchanges aren't supposed to be loaning out customer funds, or using customer funds to pay their workers. Transaction fees keep them afloat.

        But transaction fees aren't enough to make you rich. And the owners of the crypto exchange started their business for the sole purpose of making themselves rich. Since crypto has no legitimate use, the only way to get rich from crypto is fraud.

      • Re: (Score:2)

        by tlhIngan ( 30335 )

        Crypto exchanges aren't supposed to be loaning out customer funds, or using customer funds to pay their workers. Transaction fees keep them afloat. So when an exchange is forced to halt withdrawals it looks really bad; there are multiple examples of exchanges running out of money because of fraud.

        Hah. If you couldn't get banks to not loan out too much money, what's to stop the Deregulated Finance industry from doing it?

        Customer's money was used to buy more crypto investments because it couild only go up and

    • crypto is supposed to better than infinitely printable dollars with fake insurance

      • Re: (Score:3)

        by gweihir ( 88907 )

        Well, yes, it is. The slight problem is that the USD is not "indefinitely printable" and the insurance banks have is not "fake". If you lie enough about the competition, you can make any crappy product look good.

    • Re:wow (Score:4, Informative)

      by Opportunist ( 166417 ) on Monday July 04, 2022 @11:24AM (#62672236)

      Erh... no.

      If you think that the bank is sitting on your money and waiting for you to withdraw it, you're an idiot. You know, at least you should know, that a bank uses that money to hand out loans. These loans create the interest that you get for your savings (plus a not too shabby surplus interest for the bank).

      Also, banks are incredibly severely regulated. At least over here. Bank laws over here require that every bank has to deposit 8% of their loan volume in government bonds. Give or take, depending on the loan (that's why mortgages are fairly cheap, they don't require that much money to be tied up in bonds). Take your average bank and ponder how much 8% of their credit volume is. You can't even try to withdraw that amount of money in a relevant time. Even if you're Elon Musk.

      Also, savings (again, at least over here) are guaranteed by the government up to a certain amount (IIRC it's like 100k). In other words, even if the bank goes bankrupt, the government will cover your losses. That is quite comforting. And a pretty good reason for the government to hold them by the balls with regulations that would make any other industry throw a fit.

      All that contributes to the stability we have in banks here. And that in turn contributes to the trust people have in banks. Do banks fail? Yeah. Well, no. "Surprisingly" whenever a bank is about to fail, some other bank hoovers them up and they "consolidate" without much of a hitch. You, as the average bank customer, don't even notice anything, except that there's now a different logo on your statement.

      Bank business is a bit like sausages. You don't want to know just what kind of shit is going on inside. But then again, you also don't really need to. It works. For you. Your money is safe. And after all, that's all 99.9% of the people really care about.

      • And a pretty good reason for the government to hold them by the balls with regulations that would make any other industry throw a fit.

        And yet banks turn profits that are the envy of most other industries. It's almost like regulations that protect consumers are a good thing, not just for consumers but also for industry. I wish more people would understand that.

        • In all fairness, they turn those fantastic profits despite those regulations. We're talking about a business that deals in a commodity literally every other business needs.

      • You are generally correct for standard situations. But people lost money to banks in times of turmoil.

        For example, if you have rampant inflation of the currency you have savings in. Sometimes it can be so severe that amount for which you could buy eg. a car can be devauled to the point where you can buy only eg. a loaf of bread, over a period of a few days or weeks.

        In times like these (I experienced it in 1980s ex-Yugoslavia), banks delayed withdrawals so people couldn't convert increasingly worthless money

        • Yugoslavia was a very special case, of a country that was essentially ceasing to exist. A situation that is fairly unlikely to happen with the US or the EU at this point.

          • We didn't see it coming. Once it came we couldn't believe it really can be true. Let's hope for the best.

            • Sorry to tell you, but everyone saw that one coming. After Tito died, we pretty much expected the Balkan to explode any minute. It was somehow kept together 'til the Iron Curtain was history, then Yugoslavia was history.

    • Is it though? This would be true only if the crypto exchange were engaging in good-faith trading. This is by no means an established fact. More likely, this was a swindle from the beginning.

    • No, this isn't a bank run. In a bank run, the bank has plenty of money invested in loans, 30 years mortgages etc. and can't pay back everything _now_ but could pay back over many years. The worst case I know, the German Herstatt bank which actually _did_ go bankrupt paid back 97% of all the money over the next 30 years.

      But in this case, there is nowhere near enough there. All the money paid in that they are legally required to pay back is vastly more than everything they are owed. The problem is not peop

  • On its website, Vauld says it offers 12.68% annual yields on staking several so-called stablecoins including USDC and BUSD and 6.7% on Bitcoin and Ethereum tokens.

    So a 12.5% AY implies between a 1/8 and 1/10 chance of going tits up in any given year.

    Why is anyone surprised here?

    • Out of curiosity, how did you reach the 1/8 and 1/10 figures? But I agree with the sentiment of your comment: If there was a way to get 12.5% yield without risk to the capital, you can bet that anyone in possession of such rare knowledge would 1) zealously hoard that rare piece of knowledge and 2) pull money from other investments and even reverse-mortgage every piece of real-estate at their disposal so they could put as much money into the scheme as possible. Too bad such a thing doesn't exist.

      • Depends what you think the risk-free rate of return is -- usually something like US Treasury Bonds so that's been between 1-3%

        The risk-adjusted rate of return is equal to the difference between its return and the RFRR -- so you have to subtract that off and invert it to compute the implied risk.

  • 12.68% is 20% more than S&P 500 long term (Score:5, Insightful)

    by waspleg ( 316038 ) on Monday July 04, 2022 @11:10AM (#62672180) Journal

    average gains [investopedia.com]. These are most of the biggest companies on Earth. Why would a shitty cryptoscam start up promise this? Because Ponzi.

  • The grand master plan of crypto (Score:3, Interesting)

    by Anonymous Coward on Monday July 04, 2022 @11:11AM (#62672186)

    The plan for all cryptocurrencies isn't what they want to make you think it is. It's more sinister than the egalitarian image the crypto boys portray for it.

    After the 2008 financial meltdown, cryptocurrencies were born out of it, declared to be the means by which people could be freed from banks/governments, and promised to avoid any such future meltdowns from happening ever again.

    But the crypto boys watched closely the result of that meltdown, and formulated their plan: create a new form of currency, and for it a new financial system detached from traditional ones (those burdened by "governments and regulations") - they called it "DeFi" for "Decentralized Finance", but its dirty little secret is that it's really "Deregulated Finance".

    Their plan is to make this new money be adopted by the masses, so they start it off with a low price, then gradually increase it, by virtue of them just pulling numbers out of thin air for its value, until it catches the attention of the masses - then it gets more and more "valuable" from the collective faith of its given value ("network effect"), until traditional institutions and the typical "1%" billionaires start to notice and, greedy as they are, want in on the action too.

    So now those that got in at the ground floor have gained all this "value" out of thin air, and once they're ready, they'll pull out all pretty much at once - that it'll create a sell-off panic, and a new meltdown is born! And because of their "De[regulated]Fi" system, the bros have already shifted all the risks away from themselves onto others, so they'll make out like bandits, leaving everyone else to "hodl" the bag.

    But the bros were really observant about that last meltdown - and noticed all the "bailouts" the big banks got - so as they were shifting the risks to others, they increased their investments into what would get the next bailouts - so in the end they'll make out like bandits twice: the first time from suckering everyone else into their pump-and-dump scam, and again once they benefit from the bailouts that'll get handed out.

    And there you have it folks, the real master plan of crypto.

    --
    "Those who fail to accept it will mod the truth down to -1." -Prof. Feynman

    • Re: (Score:2)

      by jvkjvk ( 102057 )

      >once they benefit from the bailouts that'll get handed out.

      There will be no bailouts. Everyone playing in crypto is totally doing so at their own risk, especially the exchanges and coin creators. They all know what they are doing.

      Never expect a bailout for the little guys either, they have no money so who cares about them? /s

  • The Future Culture War (Score:1)

    by Anonymous Coward

    Racism, misogyny, homophobia, religious fascism, will all disappear. The real culture war will between libertarians and anarcho-capitalists.

  • They can't keep it above $20k anymore (Score:4, Insightful)

    by rsilvergun ( 571051 ) on Monday July 04, 2022 @11:18AM (#62672226)
    Despite a ton of market manipulation from big players who are desperate to keep confidence in the market from collapsing (since it's all funny money so once confidence goes the whole ponzi busts). Surprisingly Ethereum has held above $1000 for the most part, but that's probably just Great Fools "hedging" their Bitcoin losses with Ethereum.

    All I can say is good riddance, or at least I hope so. As the regulatory noose tightens the money laundering and ponzi scams will go away and the bottom will drop out. All that'll be left are a handful of speculators who lose their shirts.

    This can still change of course. They're still trying to get crypto classified as a commodity so they can have the much weaker commodities regulations instead of the SEC looking into their shady schemes.

    Commodities get a lot less regulation because they have actual real world value and as such are much safer investments. If I buy 1000 pork belies I know I can at least get something out of them even if it's only jerky. Crypto is obviously not a commodity, but that's not stopping them from gunning for less regulation.

    If they get it then that's going to be bad. They'll be able to run an almost completely unregulated securities exchange. I'd like to think /. readers are smart enough to understand how bad the market crash from that is going to be, and that their own savings and retirements and even livelihoods will be affected.

    • Despite a ton of market manipulation from big players who are desperate to keep confidence in the market from collapsing (since it's all funny money so once confidence goes the whole ponzi busts). Surprisingly Ethereum has held above $1000 for the most part, but that's probably just Great Fools "hedging" their Bitcoin losses with Ethereum

      I thought it might go down faster than it's doing right now, but then I thought about it and realized there's an awful lot of people who's hopes and beliefs have revolved around Bitcoin for the last few years and it's going to be difficult for them to let go.

      The bubble has burst but it looks like it will be a long slow decline.

      I'm not sure where the point is that mining is no longer profitable because of running costs, but it does exist. Once we pass that point then who's going to maintain the blockchain?

      • by the exchanges and miners to try and keep it up. If it dies now then it stays dead. The spell will be broken and people will see the emperor has no cloths.
      • It will burst if confidence is lost. So far it has not. The big funders are coming in and trying to support it. Probably long enough for them to arrange a very quick exit and leave the little investors with nothing. I'd expect nothing less from Thiel.

    • Surprisingly Ethereum has held above $1000 for the most part

      It's the monkey NFTs. Has to be.

  • Greed (Score:3)

    by bill_mcgonigle ( 4333 ) * on Monday July 04, 2022 @11:39AM (#62672260) Homepage Journal

    Satoshi: Trustless. Permissionless. Be your own bank.

    Scammers: Send us your crypto and we'll send more back. Trust us.

    Greed creates fools.

  • I guess that more and more are becoming aware of the scam that most cryptocurrency companies embody.
  • Senseless waste of vital resources.
  • As for me, I prefer online trading. I think it to be rather safety way to get more profits. If you are a newbiee, you can read Etoro US review. https://tradersunion.com/broke... [tradersunion.com] I hope you will also like it!

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