Babel Finance will delay debt payments after halting client withdrawals and redemptions for all products so let’s read more today in our latest cryptocurrency news.
The crypto lending companies that move user deposits into the DEFI protocols for bigger yields have been at risk of liquidation amid the market pullback. For example, Babel Finance will delay debt payments after suddenly halting client withdrawals and redemptions for its products a week ago. The platform reached agreements with major counterparts and customers but it is still unclear when the company will resume the redemptions and withdrawals.
The Hong Kong-based company said that the preliminary agreement of reprieving the debt repayments is easing up the short-term liquditiy pressures. The relief came after the company implemented an emergency assessment of the busienss operations. The troubled crypto lender is in conversations with larger institutions for solutions like setting up a new entity that will take up some of the debt. In the wake of Celsus blocking withdrawals and transfers between accounts and failing to provide solutions for its users, Babel Finance followed a similar approach and cited extreme market conditions as well as liquidity issues as the main reason for the move.
The crypto company refuted the rumors that it told its partners that it was insolvent. In terms of speculation about the liquditiy crisis, the company clarified that it had no business with the hedge fund Three Arrows Capital which sought a bailout plan through an asset sale and rescue by another company. Though the company noted it will provide updates in a timely manner, it didn’t release more details about the platform’s ability to allow users to withdraw their funds.
In a previous funding round backed by VCs like Sequoia Capital China, Jeneration Capital, and Dragonfly Capital, the company is valued at $2 billion after the latest $80 million fundraisings. However, the company had an outstanding loan balance of $3 billion at the end of last year.
As recently reported, Babel Finance stops withdrawals and became the latest crypto lending platform to suspend withdrawals and the company stated it is facing unusual liquidity pressures amid the broader crash in the crypto prices due to a lack of available assets readily on hand as the basis of the decision to prevent the customers from pulling out their money from their accounts.
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