On Monday, Hong Kong-based crypto lending platform Babel Finance said that it has agreed with multiple counterparties on the repayment period of several existing debts. The preliminary agreements move comes to help relieve the company’s short-term liquidity crisis. In addition, the announcement also said that Babel continues to seek support from potential investors and shareholders.
Notably, the crypto unicorn has been suffering from unusual liquidity problems recently. On June 17, Babel suspended withdrawals and redemptions, creating sudden panic among users. On June 20, the firm said it is taking several steps to solve the issue.
In the latest public announcement, the company said it “will actively fulfill its legal responsibilities to customers and strive to avoid further transmission and diffusion of liquidity risks.”
Furthermore, Babel Finance is conducting an immediate assessment of business activities to determine the company’s liquidity status. Babel Finance’s management is in constant contact with shareholders and potential investors in order to resolve or alleviate the liquidity problems.
According to some reports, the company is in talks with major institutions about forming a new entity to help with the debt. The firm’s intention to continue withdrawals was not disclosed in the formal release.
Babel Finance has pledged to continue providing timely and transparent updates to its customers, counterparties, and other partners.
The liquidity crisis in the DeFi market
With the crypto market plunging, the DeFi market suffers from a severe liquidity crisis. Multiple crypto companies have been facing associated insolvency risks. Notably, crypto hedge fund Three Arrows Capital, which supported Optimism grabbing $150 million, is seeking digital asses sales and a bailout after facing extreme risks.
Moreover, as TheCoinRise reported, crypto lending platform Celsius Network has also halted withdrawals to minimize liquidity pressure. On June 20, the company said that it is still looking at ways to resolve withdrawal woes. Celsius is also dealing with a class-action lawsuit filed by an enraged crypto YouTuber, as we reported.