After crypto company Celsius stopped user withdrawals, causing turmoil in the cryptocurrency market, another digital asset company announced the suspension of withdrawals and withdrawals from its customers.
This is Babel Finance, a cryptocurrency financial services company based in Asia.
Babel Finance suspends withdrawals due to ‘liquidity pressures’
According to the company, withdrawals will be suspended for a period of five days. As justification for the move, Babel Finance cited “unusual liquidity pressures”:
“Due to the current situation, Babel Finance is facing unusual liquidity pressures. During this period, redemptions and withdrawals of Babel Finance products will be temporarily suspended”, said the company in a note published on its website.
Based in Hong Kong, Babel Finance is a financial institution focused on cryptocurrencies. The company serves institutional and high net worth investors worldwide.
As the company reported on its website, the cryptocurrency market has experienced major fluctuations in recent days. In this sense, some institutions in the sector experienced high risk events.
After reporting the suspension, Babel stated that it is in “close communication with all related parties regarding the actions”. At the same time, it said it is focused on protecting its customers.
“The resumption of normal service will be notified separately. We sincerely apologize for any inconvenience caused.”
About Babel Finance
In May of this year, Babel Finance raised US$80 million in a Series B round. As a result, it now has a valuation of US$2 billion.
According to CoinDesk, at the end of 2021, the company had an outstanding loan balance of more than $3 billion. The figure was well above the $2 billion in February.
In addition, the company averaged $800 million in monthly derivatives trading volume. In addition, it has structured and traded over US$20 billion in options products.
Celsius and Three Arrows Capital Case
As mentioned, the crypto market was heavily shaken earlier in the week when digital asset lending platform Celsius suspended withdrawals from its users.
This put further pressure on cryptocurrency prices that were already suffering the impact of an unstable macroeconomic scenario with rising inflation and interest rates.
In this context, the crypto hedge fund Three Arrows Capital (3AC) has suffered liquidations in the order of US$ 400 million, and it is speculated that the fund is at risk of becoming insolvent. As a result, there are fears of “contagion” for companies with exposure to 3AC.