Factbox-Crypto Lenders Struggle | Investment News

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(Reuters) – Crypto lenders, which have boomed during the COVID-19 pandemic, have recently struggled amid a slump sparked by a major token’s May crash and global risk sentiment .

Here are some of the companies that have recently encountered problems:

The South Korea-based company, which is behind the dollar-pegged stablecoin TerraUSD and its paired Luna token, plunged in value in May, triggering selling and setting off a chain reaction.

The company’s co-founder, Do Kwon, announced a “recovery plan” in May, with additional external funding and the rebuilding of TerraUSD so that it is backed by reserves rather than relying on an algorithm. to maintain its 1:1 dollar peg.

An official from South Korea’s supreme prosecutors office said on June 21 that several Terraform employees had been put on a no-fly list and could not leave the country.

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

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

Capital of the Three Arrows (3AC)

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

According to a July 1 court filing, the company was seeking protection from creditors under Chapter 15 of the US bankruptcy code, which allows foreign debtors to protect US assets.

The loan company froze its withdrawal and transfer services, citing “extreme” market conditions, and hired advisers on a potential bankruptcy filing.

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

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 he was facing “financial challenges” due to volatile market conditions.

“The financial difficulties of our major trading partners inevitably affect us,” the company said, adding that customers had withdrawn about $200 million since June 12.

The Hong Kong-based crypto lender said it temporarily suspended withdrawals and redemption of crypto assets on June 17 as the company scrambles to pay its customers.

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

(Compiled by Dina Kartit; Editing by Maju Samuel)

Copyright 2022 Thomson Reuters.

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