Crypto lender Babel Finance on Monday said it has signed preliminary agreements with several counterparties on the repayment period of some debts. The preliminary agreements will help ease the company’s short-term liquidity pressure.
Moreover, the firm will continue to seek liquidity support from shareholders and potential investors.
Babel Finance Looks to Solve Liquidity Crisis
Last week, the firm suspended withdrawals citing unusual liquidity pressure amid extreme market conditions. Babel Finance in an official announcement on June 20 said the firm is taking several steps to solve its liquidity crisis. A statement on the website reads:
“We have communicated with major counterparties and relevant customers, and reached preliminary agreements on the repayment period of some debts, which has eased the company’s short-term liquidity pressure.”
Moreover, Babel Finance is currently carrying out an emergency assessment of business operations in order to understand the company’s liquidity status. The Babel Finance management is actively communicating with shareholders and potential investors to solve or ease the liquidity pressure.
In fact, some reports have claimed that the firm is in discussions with large institutions over setting up a new entity to ease some of the debt. The plan to continue withdrawals was not revealed by the firm in the official announcement.
However, Babel Finance has committed to continue providing updates in a timely and transparent manner to its customers, counterparties, and other partners. Moreover, the firm will fulfill its legal responsibilities and work on preventing liquidity risks in the future.
“We thank our customers for their understanding and support during this period, and hope to obtain further support from our partners.”
DeFi Market Faces Liquidity and Insolvency Crisis
The DeFi market has suffered a liquidity crisis, with many crypto firms facing insolvency risks. Crypto hedge fund Three Arrows Capital seeks digital assets sales and bailout as faces insolvency risks.
Meanwhile, crypto lender Celsius and others have halted withdrawals to decrease liquidity pressure. The DeFi market is in limbo as the FUD continues to rise.