Liquidity troubles hit more crypto platforms
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NEW YORK • A broad-based sell-off in digital assets and the collapse of high-profile tokens TerraUSD and Luna have caused ripple effects across the crypto industry.
Major lenders Celsius Network and Babel Finance have frozen withdrawals, and Three Arrows Capital, a major crypto hedge fund, is facing liquidity troubles that have rattled investors.
The total market value of cryptocurrencies, which topped US$3 trillion (S$4.17 trillion) last November, has dropped to US$957 billion, according to data from CoinGecko.
In one of the latest developments, crypto physical futures exchange CoinFlex said it had paused all withdrawals on its platform, citing "extreme market conditions" last week and "continued uncertainty involving a counterparty".
It did not disclose the name of the counter party, but did say that it is not Three Arrows Capital or any lending company.
CoinFlex, a smaller crypto exchange that focuses on derivatives trading, currently supports 34 crypto pairs for derivatives. The exchange's investors include Mr Roger Ver, who is one of the most vocal Bitcoin Cash advocates.
CoinFlex provided an estimated date for withdrawals of June 30.
In another development, Voyager Digital, a crypto brokerage and exchange, is limiting withdrawals by customers from its platform to US$10,000 and to 20 transactions in a 24-hour period.
The company, which secured credit lines of US$485 million in the past week from Alameda Research to shore up protection for customer assets, announced the limits on its website.
It also disclosed exposure of about US$660 million in loans to Three Arrows Capital, sending shares plunging as analysts raised the prospect of further damage. Voyager shares trading in Toronto have plunged 95 per cent this year.
A third recent development involves Nexo, a crypto lender that has positioned itself as immune to the storms shaking decentralised finance. It said it had hired Citigroup to advise on potential acquisitions.
The lender said it was seeking "best-in-class advice" from the bank, including on "liquidity restructuring deals", according to a blog post dated Wednesday.
Nexo has made an unsolicited offer to acquire assets of its competitor Celsius, which has frozen investor withdrawals.
The offer "didn't come to fruition", a spokesman for Nexo said.
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