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Peter Thiel-Backed Crypto Lender Vauld Suspends Withdrawals

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Re: Peter Thiel-Backed Crypto Lender Vauld Suspends Withdrawals

#3

Post by Barrera »

> A cryptocurrency lender backed by Peter Thiel and Coinbase Global Inc. suspended withdrawals, trading and deposits on its platform, citing volatile market conditions and financial difficulties facing key business partners.

> The platform, Vauld, said Monday that it froze the operations after users pulled almost $200 million over the last three weeks. A sharp decline in cryptocurrency prices that began with the collapse of two cryptocurrencies in May has spooked traders and caused knock-on effects in the digital asset world.

It's called "a bank run":

> A bank run or run on the bank occurs when many clients withdraw their money from a bank, because they believe the bank may cease to function in the near future. ...

https://en.wikipedia.org/wiki/Bank_run

Except this bank has no FDIC insurance, no backstop, nothing.

Oddly enough, I think US tax policy may play a factor here in motivating people to ignore the repeated and loud warnings about how this was a really, really bad idea. When you're facing massive capital gains taxes, and have an inkling that those gains will turn to losses, the idea of lending out the asset, spending the cash without incurring tax, then getting the asset back starts to look attractive.

Of course, the real problem was that those warnings got ignored. I mean, who reads something like this without alarm bells going off all over the place?

> Our interest rates and trading fees are among the best in the industry. You can earn interest of up to 11.57% (APY) on your cryptocurrencies, and borrow tokens with our spread being as low as 1%. We don't charge deposit or withdrawal fees, or fix a cap on your daily withdrawals. You can check all our fees and rates here.

https://www.vauld.com/home

Re: Peter Thiel-Backed Crypto Lender Vauld Suspends Withdrawals

#4

Post by bshipp »

Barrera wrote: post #3

> A cryptocurrency lender backed by Peter Thiel and Coinbase Global Inc. suspended withdrawals, trading and deposits on its platform, citing volatile market conditions and financial difficulties facing key business partners. > The platform, Vauld, said Monday that it froze the operations after users pulled almost $200 million over the last three weeks. A sharp decline in cryptocurrency prices that began with the coll…

When an asset class increases in value for a long enough period of time there is no shortage of explanations for why it's different this time. Real estate, commodities, tech companies, it makes no difference, It's always the same.

Re: Peter Thiel-Backed Crypto Lender Vauld Suspends Withdrawals

#8

Post by ggm »

Thiel is a smart investor but even smart investors lose money on some investments. "backed" can have many meanings. I would imagine he has some kind of stop-loss on his exposure to risk here. And indeed, its "Valar Ventures" which has invested, an indirect vehicle.

Note: I dislike the guys politics, but that has nothing to do with an objective assessment of his financial investment chops. Same with Andreessen, he doesn't figure in my 'friends of carlotta' list but he obviously knows a good investment when he sees one.

My personal belief is that Thiel is too smart to have believed any of the bullshit about coins and NFT, and was in this as risk play for the upside. I am sure he made heaps doing this elsewhere in the crypto bubble, he can wear this (small, in his terms) downside outcome.

Re: Peter Thiel-Backed Crypto Lender Vauld Suspends Withdrawals

#10

Post by fmajid »

ggm wrote: post #8

Thiel is a smart investor but even smart investors lose money on some investments. "backed" can have many meanings. I would imagine he has some kind of stop-loss on his exposure to risk here. And indeed, its "Valar Ventures" which has invested, an indirect vehicle. Note: I dislike the guys politics, but that has nothing to do with an objective assessment of his financial investment chops. Same with Andreessen, he doe…

Thiel's hedge fund Clarium Capital lost a fortune.
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