Crypto lending platform Babel Finance has managed to strike deals that have helped alleviate its short-term liquidity problems. The company unveiled this news through a notice earlier today. Babel Finance said it achieved this feat by communicating with its counterparties and relevant customers.
According to the notice, the company reached preliminary agreements on the repayment periods of some debts with the above parties. Babel Finance added that it is holding talks with shareholders and potential investors to get liquidity support.
Babel Finance continued,
Given the current context of severe market volatility, Babel Finance’s management will continue to communicate closely with customers, counterparties, and other partners, and provide updates in a timely and transparent manner.
In conclusion, the company promised to fulfill its legal responsibilities to customers. Additionally, Babel Finance said it is striving to prevent further transmission and diffusion of liquidity risks.
Babel Finance is Yet to Resume Withdrawals
This news comes after Babel Finance halted withdrawals and redemptions on Friday, June 17, citing unusual liquidity pressures. Despite sharing the above developments, Babel Finance is yet to announce when it plans to resume withdrawals.
A source familiar with the company’s operations told Bloomberg that Babel is talking with large institutions about possible solutions. Among the solutions the company is considering is setting up a new company to assume some of its debt.
Nonetheless, the source – who requested anonymity – did not disclose the names of the lenders the company is talking with. The person also failed to disclose how soon the company might be able to resume withdrawals.
Crypto Firms Suffer as the Bear Market Intensifies
Babel Finance is part of a list of crypto companies that faced liquidity problems after the market crashed. Celsius Network came first, announcing the suspension of withdrawals, swaps, and transfers on its platform.
Soon afterward, Three Arrows Capital (3AC) faced liquidation after failing to meet margin calls from lenders.
Finblox, a staking and yield earning platform that 3AC invested in, followed suit, reporting operational difficulties on June 17. The Finblox team reduced daily and withdrawal limits to $500 and $1,500, respectively. In so doing, the company sought to prevent possible insolvency while assessing the impact 3AC’s liquidation had on its liquidity.
We are thrilled to announce the close of $3.9M strategic seed round 🎉
The team is honored for the support of the most prominent funds: #ThreeArrowsCapital, @Sequoia_India, @msacapital, @dragonfly_cap, @coinfund_io, @OrangeDAOxyz, @KyrosVentures, and other amazing investors! 🚀 pic.twitter.com/UMAZCmvQun
— Finblox (@finblox) March 15, 2022
Other crypto players are also facing challenges as bears continue to dominate the crypto market. For instance, BlockFi CEO Zac Prince announced the company would lay off 20% of its staff. Coinbase also laid off 18% of its employees due to financial difficulties.