Even more crypto lenders are struggling to stem the tide of withdrawals

A coin with the Bitcoin logo dipped in some snow.

picture: SIVStockStudio (Shutterstock)

The number of crypto lending platforms that actually allow users to take their cryptos home is dwindling. One company even reported that its users drained their accounts totaling nearly $198 million over the past three weeks.

CoinLoan announced On Monday, it severely impacted users’ ability to withdraw most of their crypto assets. That same day, Vauld essentially gave his clients a fatherly slap on the head and told them, “it is for your own good‘ while withdrawals were wiped out altogether. The latter company is reportedly looking for its own “Daddy Warbucks” to help the company weather the harsh, cold hell of the ongoing “crypto winter.”

CoinLoan informed users on its blog that it limits the total amount of daily withdrawals to just $5,000 over a 24-hour period in order to keep the spate of withdrawals to a mere trickle. That’s what the company said would lift the restriction “as soon as market conditions permit”.

It’s an almost 99 percent reduction in the total withdrawal limit from where it was originally $500,000. The company went on to pat itself on the back for not halting all withdrawals “like some other companies have done,” adding, “The users who have trusted us with their money are our number one priority.”

Crypto users are trying to abandon some ships en masse, and companies are using cork stoppers to plug the holes in their sinking ships. Darshan Bathija, CEO of Vauld, wrote on the company blog that the suspension of payouts was due to “a combination of circumstances such as volatile market conditions, the financial difficulties of our key business partners which inevitably affect us and the current market climate that has led to it was a significant amount of customer withdrawals exceeding $197.7 [million] since [June 12].”

The two companies join a variety of other crypto platforms, including Coinflex, Celsius and Binance who have either stopped or massively restricted the payouts. The Singapore based Vault had just recently reduced its overall workforce by 30%, according to email statements sent to by executives money control. Other companies like BlockFi and Crypto.com have announced similar drastic cuts due to the price of crypto bear market status.

Bathija wrote that they are discussing steps with potential investors. Reuters reported on Tuesday that London-based crypto lending platform Nexo is considering buying Vauld to “accelerate its deeper presence in Asia.” There’s no word yet on how much this buyout could be worth. Reuters pointed to an Indian newspaper The Hindu business line the company had previously reported this $1 billion in wealth and aimed to break the $5 million mark this year.

Though Nexo is considering expansion in the crypto space, many bears still doubt the health of the incredibly unregulated industry. Three Arrows Capital — a giant crypto hedge fund — recently defaulted on millions in Bitcoin loans and was convicted liquidate his assets by a court in the Virgin Islands last week. That doesn’t mean it doesn’t exist big money still being pushed into some crypto projects by investment firms looking to shore up the faltering crypto market.