After a cryptocurrency market slump, the $2 billion fund announced that it is blocking customers’ ability to withdraw their assets. Babel Finance, a Hong Kong-based crypto lending platform, has announced that it will suspend withdrawals and redemptions.
According to the firm, it was facing “unusual liquidity pressures” due to a cryptocurrency price crash. It cited a shortage of assets as the reason for its decision not to allow customers move money out of their accounts.
In a statement posted on its website, Babel Finance stated that the crypto market had experienced major fluctuations in recent months and that some institutions within the industry have been affected by conductive risk events.
This follows a similar move made by crypto lending platform Celsius earlier this week, which prohibited customers withdrawing or transferring funds. Its positions in Lido Steaked Ethereum (stETH), were under threat after it lost its peg with ETH. Three Arrows Capital is facing questions about whether it’s insolvent.
Babel Finance stated it was “in close communication” with all parties regarding the details of the steps it is taking to resolve the problem. It is trying to stabilize its finances and protect its customers.
Tower of Babel
Babel Finance was valued at $2 billion less than a month ago following a $80 million Series B round of fundraising. The statement that was included with the news stated that the company is the “world’s largest wholesale crypto financial service provider.”
At the end of 2021, the firm had outstanding loans totalling $3 billion and was seeing $800 million in monthly trading volume in derivatives-financial contracts based on the value of an underlying asset. The firm had also traded more than $20 billion in option products.
According to Babel Finance’s May press release, the company has approximately 500 clients and serves a “selected clientele.” The company has seen a rapid growth from 50 employees to more than 170 since its Series A funding round in May 2021. It also opened a new Singapore office. It secured partnerships with Sequoia Capital China and Zoo Capital as part of that funding round.
