Fact box: Crypto lenders have problems

The Celsius Network logo and representations of cryptocurrencies are seen in this illustration taken, June 13, 2022. REUTERS / Dado Ruvic / Illustration

July 6 (Reuters) – Crypto lenders, which flourished during the COVID-19 pandemic, have recently run into difficulties due to a downturn caused by the fall of a major token in May and a global risk-off sentiment.

Below are some of the companies that have gotten into trouble lately:

Terraform Labs

The South Korean-based company, which is behind the dollar-denominated stack coin TerraUSD and its linked token Luna, plunged in May, triggering sales and triggering a chain reaction. read more

The company’s co-founder, Do Kwon, announced in May a “recovery plan”, with additional external financing and reconstruction of TerraUSD, so that it is backed by reserves instead of relying on an algorithm to maintain its $ 1 dollar tie-up. read more

An official at South Korea’s top prosecutor’s office said on June 21 that several Terraform employees had been placed on a no-fly list and could not leave the country. read more

Voyager Digital (VOYG.TO)

The US-based crypto lender said on July 6 that they had filed for bankruptcy. read more

In its Chapter 11 bankruptcy filing, Voyager estimated that they had more than 100,000 creditors and somewhere between $ 1 billion and $ 10 billion in assets, and liabilities of equal value.

Three Arrows Capital (3AC)

The Singapore-based crypto hedge fund went into liquidation on June 29, two days after receiving a default notice from lender Voyager for failing to make payments on a crypto loan of around $ 650 million. read more

According to a lawsuit on July 1, the company sought protection from creditors under Chapter 15 of the US Bankruptcy Code, which allows foreign debtors to protect US assets. read more

Celsius network

The loan company froze its withdrawal and transfer services, citing “extreme” market conditions, and has hired advisers for a possible bankruptcy. read more

On July 4, the US-Israeli company said it had laid off a quarter of the workforce, Calcalist reported.

Vauld

The Singapore-based company said on July 4 that it had suspended withdrawals for its more than 800,000 customers. In a blog post, Vauld said it was facing “financial challenges” due to unstable market conditions.

“The financial difficulties of our key business partners are inevitably affecting us,” the company said, adding that customers had withdrawn around $ 200 million since June 12. read more

Babel Finans

The Hong Kong-based crypto-lender said it had temporarily suspended withdrawals and redemption of cryptocurrencies on June 17, while the company struggled to pay its customers. read more

“Due to the current situation, Babel Finance is facing unusual liquidity pressures,” the company said, highlighting high volatility in the digital currency market.

Compiled by Dina Kartit; Edited by Maju Samuel

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