Which insolvent credit companies are reopening frozen accounts?
Several crypto platforms froze withdrawals this summer. Who restored account access to their users?
In recent months, several cryptocurrency lending companies and other services have suspended withdrawals and frozen customer balances.
These companies began to suffer from low liquidity when Bitcoin prices fell to levels near $20,000 in June. In order to regain its solvency, each company was forced to buy back its investments or seek new methods of financing.
Not all companies have managed to remain solvent and some have entered bankruptcy proceedings or started a restructuring process. Still, many companies are trying to reimburse users through a recovery plan.
Below are the bylaws of the crypto companies that have halted withdrawals.
Babel Finance suspended withdrawals on June 17. Estimates at the time suggested the company lost as much as $225 million from its investments.
According to Bloomberg, the company plans to raise funds through its restructuring plan. Babel Finance intends to raise between 250 and 300 million dollars through convertible bonds and obtain a revolving line of credit of 200 million dollars.
Beyond that, the company has not announced any specific plans for customers to withdraw funds from their account balance.
On June 12, Celsius became one of the first companies to suspend withdrawals. During its bankruptcy hearing in July, the company presented a reorganization plan that will allow it to raise funds through asset sales, mining operations and fundraising.
Under Celsius’ proposed stimulus package, users will be able to withdraw their cash balance at a discount or make a continuous long-term investment.
However, Celsius has not announced any specific process for users to get their funds back, and withdrawals on the platform have remained closed since August 10.
CoinFLEX suspended withdrawals on June 23 and has so far managed to avoid filing for bankruptcy. It started resuming withdrawals in mid-July, when it allowed users to withdraw up to 10% of their balance.
To recover more, CoinFLEX plans to raise funds by selling a recovery token, seeking investors, and finding depositors willing to exchange deposits for equity.
CoinFLEX is also entering arbitration in Hong Kong with crypto entrepreneur Roger Ver, which supposedly owes the company up to $84 million.
Hodlnaut is the latest crypto lender to suspend withdrawals. The Singapore-based company announced its decision to suspend services on August 8.
The company added that it would stop trading and deposits as well as withdrawals. In addition, it will withdraw an application from the Monetary Authority of Singapore (MAS) which allegedly saw it offering token payment services.
Hodlnaut said it will provide an update on August 19, but there is no indication that it will resume withdrawals and other services on that date.
Nuri, formerly known as Bitwala, filed for bankruptcy on August 9. The exchange plans to keep withdrawals and most other functions open despite this decision. However, the exchange will not allow the opening of new accounts, nor will it accept new customers.
Vauld suspended withdrawals on July 4. He has since filed for protection from creditors under bankruptcy law, although he has not actually filed for bankruptcy.
Vauld would discuss restructuring options that would help keep it operational. Additionally, the company has been exploring the possibility of an acquisition by Nexo since July, although the deal has yet to be confirmed.
Beyond that, Vauld has not announced any specific plans to return funds to its users.
Voyager Digital suspended operations on July 1 and filed for bankruptcy on July 6. However, the bankruptcy proceedings have progressed positively and the company has obtained court approval that will allow it to return funds to customers.
While it’s disputed whether the company is able to fully compensate users, Voyager Digital has a clear plan in place for users to recover the funds.
The company is now authorized to return $270 million to customers through Metropolitan Commercial Bank special accounts starting Thursday, August 11.
Zipmex froze withdrawals on July 20. He then filed for a number of moratoriums for bankruptcy protection on July 29 without filing for bankruptcy.
The company started opening withdrawals for Solana (SOL), Ripple’s XRP, and Cardano (ADA) the week of August 2. Starting August 11, users will be able to withdraw Ethereum (ETH) from the platform’s Z Wallet. From August 16, users will be able to withdraw Bitcoin (BTC) from the same wallet.
Zipmex says it is working to arrange for the return of Babel Finance assets. He also indicates that he is engaged in “advanced fundraising conversations” and has received an additional investment in his ZMX token from an investor.
Disclaimer: The information contained herein is provided without regard to your personal circumstances and should therefore not be construed as financial advice, investment recommendations or an offer or solicitation for trading in crypto- currencies.