Did Vauld drive CoinLoan into court-ordered liquidation?
Estonian authorities have issued a notice of restraint of disposition to crypto lending platform CoinLoan’s Estonian branch. This notice limits CoinLoan’s ability to dispose of assets. A court-assigned liquidator must approve requests for customer withdrawals.
According to sources close to the matter, that includes assets of Vauld, another collapsed crypto platform.
Basically, this means that CoinLoan will cease “all operations,” effective April 25. Peter Thiel invested in CoinLoan’s $25 million Series A.
CoinLoan’s proprietary token CLT collapsed on the news. With CoinLoan offline, CLT barely retains any exchange listings; CoinGecko reports less than $100,000 in CLT trading volume in the last 24 hours.
Worse, the token’s circulating supply, fully diluted value, and market capitalization are impossible to determine given the disarray of CoinLoan’s assets.
CoinLoan failure would be catastrophic for Vauld
Anonymous sources familiar with the matter say digital asset lender and exchange Vauld has tens of millions of dollars worth of assets on CoinLoan. Specifically, Vauld CEO Darshan Bathija is rumored to have used a personal account on CoinLoan to deposit Vauld-held assets.
Bathija has not used his Twitter account since August 2022.
Whether or not these rumors are true, using personal accounts for corporate funds has a long history in the crypto industry. For several months in 2017, for example, Tether didn’t have a bank account. The only funds it ‘possessed’ were in a personal Bank of Montreal account in the name of Stuart Hoegner, its general counsel.
In July 2022, Vauld announced that it was exploring restructuring options and suspended deposits and withdrawals.
Large debtors included Amber Group, which owed Vauld’s CEO approximately $130 million in December 2022. According to a Vauld affidavit dated November 25, 2022, that loan would come due in June 2023.
Read more: Did Tether falsify documents to fool cautious banks?
A Vauld subsidiary in Singapore called DeFi Payments had helped arrange the loans to Amber Group. Documentation referred to Amber Group as ‘Counterparty 1’ or ‘Counterparty A.’
CoinLoan initially set a $2,000 per day withdrawal limit, which would have made it difficult for Vauld’s Bathija to withdraw his deposited assets. CoinLoan had previously set $5,000 per day withdrawal limits in the wake of FTX’s collapse. Either threshold is de minimis considering the multi-hundred million dollar obligations of CoinLoan.
Bad news for CoinLoan creditors
CoinLoan had hundreds of millions of dollars in outstanding loans. It had pushed back its creditor moratorium five times. The final deadline was April 28 and it was unable to gain another extension.
Vauld, of course, was a creditor and was complaining to the court. That court has now appointed a liquidator to oversee CoinLoan’s proceedings.
CoinLoan hasn’t confirmed the initiation of formal bankruptcy proceedings. It simply called the notice of restraint of disposition “unexpected.” It said approval of withdrawal requests could delay its typical processing times by additional business days.
CoinLoan says it will appeal the decision by the Estonian government. Somehow, it expressed confidence that the court-assigned interim trustee could verify the company’s financial state in good order.
Is CoinLoan the Celsius of the Baltics?
Vauld reportedly complained to the Estonian court, which led to Estonia’s decision to issue the notice of restraint of disposition. Therefore, it’s possible that Vauld is one of the drivers of this week’s suspension of operations at CoinLoan.
CoinLoan received a notice of restraint of disposition from Estonian authorities. This notice curtails CoinLoan’s ability to process customer withdrawals.
Some people believe that CoinLoan is ‘the Celsius of the Baltic region.’ If so, that certainly doesn’t bode well for anyone with assets on CoinLoan — including Vauld.
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