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Crypto Lender Celsius to Proceed with Chapter 11 Restructuring Plan

by Blockchain NewsApril 7, 2023

In a bid to restructure and move forward with its operations, Celsius Network has announced that it will proceed with its Chapter 11 plan. The plan is designed to provide the crypto lender with a path to financial stability after facing bankruptcy. Celsius has stated that it will file a disclosure statement on April 12, containing information that will be used by claim holders to vote on the proposed restructuring plan.

The Chapter 11 restructuring plan is aimed at ensuring that the crypto lender can operate in a financially sustainable manner while also addressing the concerns of its creditors. NovaWulf, a company that invests in distressed assets, has sponsored the proposed restructuring plan.

According to a court filing made on March 31 in the United States Bankruptcy Court for the Southern District of New York, the disclosure statement aims to provide “adequate information” to claim holders to allow them to vote on the proposed restructuring plan. The statement is expected to contain a detailed analysis of Celsius Network’s operations, finances, and proposed plan for restructuring.

Celsius Network’s bankruptcy has been a significant event in the crypto world, as it was one of the first major crypto lenders to face financial difficulties. The company had attracted significant attention in the crypto community due to its high interest rates on deposits and loans. However, the bankruptcy has raised concerns about the sustainability of the business model and the risks involved in crypto lending.

The Chapter 11 restructuring plan represents a significant step forward for Celsius Network and the crypto lending industry as a whole. If successful, the plan could provide a roadmap for other struggling crypto lenders to follow. However, the success of the plan is far from guaranteed, and there are still significant risks involved in the crypto lending space.

As this is a developing story, more information about Celsius Network’s restructuring plan and its impact on the crypto lending industry is expected to emerge in the coming days and weeks.

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Babel Finance explores new restructuring opportunities with DeFi project

by Blockchain NewsMarch 6, 2023

Babel Finance, one of many cryptocurrency lending firms that suffered losses during the cryptocurrency winter of 2022, is exploring new restructuring opportunities to pay back its creditors. The Hong Kong-based firm has announced plans to build a new decentralized finance (DeFi) project called Hope, which aims to generate revenue to repay the company’s debts.

According to reports, Hope will mint a new stablecoin that will be used as a “recovery coin” for Babel. Unlike major stablecoins like Tether (USDT) and USD Coin (USDC), Hope’s namesake stablecoin will reportedly use Bitcoin (BTC) and Ether (ETH) as collateral, maintaining its 1:1 ratio with the U.S. dollar through arbitrage incentives for traders

Babel co-founder Yang Zhou is leading the restructuring efforts, and has accused another co-founder, Wang Li, of being responsible for the company’s losses. The company estimates that it owes customers as much as $524 million worth of BTC, ETH and other cryptocurrencies due to losses allegedly caused by Wang’s risky trading activities. Another $224 million was reportedly lost when Babel counterparties liquidated collateral after the firm could not meet a large volume of margin calls.

Babel’s liquidity issues are not unique, with several prominent industry lenders facing similar challenges. Voyager Digital, Celsius Network, Genesis Global and Hodlnaut are among those that have experienced serious liquidity issues due to the cryptocurrency winter in 2022. Genesis owes $150 million to Babel, its third-biggest named creditor, according to a January Chapter 11 filing.

In late February, Voyager customers voted for a restructuring plan that included Binance’s United States-based business, Binance.US, acquiring Voyager’s assets. Babel’s restructuring plans involve Hope, which will generate revenue to repay the company’s debts. Yang Zhou hopes that this project will help to save the company and restore its reputation in the cryptocurrency lending space.

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Tagged : Babel Finance / CRYPTOCURRENCY LENDING / DEFI PROJECT / News / RESTRUCTURING / Stablecoin

CoinFlex Creditors Backs Company’s Restructuring Plans

by Blockchain NewsSeptember 26, 2022

With the embattled cryptocurrency trading platform, CoinFlex may be getting headway with its restructuring plans as most of its creditors are backing the idea, as revealed in early voting.

According to the snapshot of the voters supporting the restructuring plan, as many as 46 million CFV tokens had been committed to backing the idea against 20,000 tokens saying No. Based on this trajectory, the terms of the proposal may eventually be accepted and implemented by the exchange.

CoinFlex was among the trading platform that took a significant hit with the crypto winter that swept the entire industry this year. The exchange, founded in 2019, halted its withdrawals as it claimed a counterparty was unable to pay for a margin call. The trading platform later came out to accuse Roger Ver, the CEO of Bitcoin.com, of being the counterparty. The exchange announced plans to sue Roger for failing to pay back in July.

CoinFlex has done a lot to ease the pains of its creditors as the outfit issued a 20% annual return despite the withdrawal halt.

The proposed restructuring is what defined its final attempt to get back on its feet. Per the terms of the restructuring, the exchange proposed to grant 65% of its equity to its creditors, with 15% scheduled to vest over a period.

According to the terms of the proposal, the investors who participated in the company’s Series A will be squeezed out. Still, those who participated in Series B will be retained as shareholders.

The company’s approach to its restructuring is notably different from those of other beleaguered outfits such as Voyager Digital and Celsius Network. Unlike CoinFlex, which placed the decision in the hands of its creditors through voting, the other startups filed for bankruptcy with the courts taking over their restructuring processes.

From CoinFlex’s approach, the company’s restructuring process may be finalized faster than its peers.

Image source: Shutterstock

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Tagged : COINFLEX / Crypto / Exchange / Exchanges / RESTRUCTURING

Vauld Suspends Withdrawals, Exploring Restructuring amid Market Downturn

by Blockchain NewsJuly 5, 2022

Vauld, a crypto lending and exchange firm headquartered in Singapore, announced on Monday that it has suspended withdrawals, trading, and deposits on its platform, citing the current “financial challenges”.

Vauld admitted that it is witnessing financial woes amid the ongoing market downturn, which it said prompted customers to withdraw about $198 million since June 12.

Darshan Bathija, the founder and CEO of Vauld, said that the company is exploring restructuring options and so far, has engaged Kroll, a New York-based corporate investigation and risk consulting firm, for financial advisory services, and has hired Cyril Amarchand Mangaldas and Rajah & Tann Singapore LLP as legal advisors in India and Singapore respectively.

“We are confident that, with the advice of our financial and legal advisors, we will be able to reach a solution that will best protect the interests of Vauld’s customers and stakeholders,” said Bathijaand, adding that the firm will make specific arrangements for certain clients who need to meet their margin calls.

Vauld is a three-year-old crypto lending startup, which counts Peter Thiel-backed Valar Ventures, Coinbase Ventures, and Pantera Capital among its key backers. According to July last year, Vauld had raised a total of $27 million, from investors such as Peter Thiel’s Valar Ventures, Coinbase, Pantera Capital, and Cadenza Capital.

Vauld has been offering lending services and serving as an exchange. The platform enables clients to earn what it describes as the “industry’s highest interest rates on major cryptocurrencies.” On its website, Vauld claims to offer 12.68% annual yields on staking several stablecoins, including USDC and BUSD and 6.7% on Bitcoin and Ethereum tokens. The platform allows customers to borrow against their tokens and facilitates many other trading services.

Crisis in Crypto Lending Landscape

The announcement regarding Vauld’s suspension of customer withdrawals and trading comes after the lender laid off its employees by 30% one week ago.

The job cut came as a surprise. On June 16, Bathija assured Vauld customers that the platform had no exposure to prominent lending platform Celsius Network and high-profile crypto hedge fund firms Three Arrows Capital.

In recent weeks, crypto veterans, including Binance CEO Changpeng Zhao, have warned that many more DeFi platforms are in danger of collapsing amid the current market crash.

On 13th June, Crypto lending platform Celsius Network paused all withdrawals and transfers for customers as the firm faced insolvency and bankruptcy fears. Last Friday, Three Arrows Capital filed for Chapter 15 bankruptcy in New York after weeks of speculation that it was insolvent.

In addition, another major crypto lending platform, Maple Finance, recently halted customer withdrawals after facing liquidity-related issues.

Digital assets lending firm Genesis Trading is reportedly facing losses in the hundreds of millions after the company had significant exposure to financial woes facing Three Arrows Capital and crypto lending platform Babel Finance. BlockFi also experienced substantial losses related to its exposure to Three Arrows Capital.

Such lending firms normally collect crypto deposits from retail customers and invest them in the equivalent of the wholesale crypto market, including “decentralized finance (DeFi) sites that use blockchain technology to offer services such as loans, insurance, among others outside the traditional financial sector.

Image source: Shutterstock

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Tagged : Crypto / Exchanges / RESTRUCTURING / SUSPENSION / Vauld / Withdrawals

Babel Finance Hires Restructuring Specialist Houlihan Lokey: Sources

by Blockchain NewsJuly 4, 2022

Babel Finance, a Hong Kong Bitcoin financial services company offering lending and asset management services, has hired U.S. investment banking firm Houlihan Lokey, a specialist with wide experience in restructuring and acquisitions to advise in distressed fund situations. People with familiar sources have disclosed the development.

“Babel is looking at restructuring. They’ve hired Houlihan Lokey or are in the process of hiring them. They’re in the process of signing an engagement letter,” one source said.

Another source also stated: “They [Babel] are the next major crypto firm to have some kind of some kind of outcome over the next couple of weeks, whether it’s sorting out and getting buy-in from creditors or declaring insolvency or default.”

The appointment of Houlihan Lokey would prove valuable to Babel, particularly during these difficult times, and will help to ensure that the firm continues offering first-class services to its customers.

The move comes after two weeks ago, Babel suspended customer withdrawals amid liquidity concerns.

On June 17, Babel Finance halted withdrawals and redemption of crypto assets citing “unusual liquidity pressures” amid the current extreme volatility facing the crypto market.

A few days later, Babel’s team stated that they conducted an emergency evaluation of the firm’s business operations to understand its liquidity status of the company. The team also said they addressed the company’s liquidity situation after reaching agreements with major counterparties on the repayment of borrowed funds back to the lenders to ease short-term liquidity.

“Babel Finance will actively fulfill its legal responsibilities to customers and strive to avoid further transmission and diffusion of liquidity risks,” the firm further stated.

Crypto Lending Crisis

Even as Babel Finance reassures its clients and investors that its financial situation is sound, its dramatic incident is another case that has put the stability of the lending market in the spotlight.

Babel’s troubles come at a time when the crypto market is experiencing severe distress triggered by the plunge of the Terra ecosystem in May, followed by liquidity crisis facing Celsius Network and Three Arrows Capital.

Recently, Celsius Network, a major crypto lending platform, hired attorneys specialized in business restructuring from the law firm Akin Gump Strauss Hauer & Feld LLP to advise on potential solutions to its growing financial problems.

On 13th June, Celsius halted all withdrawals, swaps, and transfers between accounts due to ‘extreme market conditions.’

While Celsius was first looking for potential financing options from investors, it later decided to consider financial restructuring.

Image source: Shutterstock

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Tagged : Babel Finance / Crypto / Enterprise / Hiring / HOULIHAN LOKEY / RESTRUCTURING