Hong Kong-based Babel Finance announced that it temporarily suspended the withdrawals and redemption of crypto assets on June 17, as the crypto lender now scrambles to pay its clients after the recent drop in the digital currency market.
Crypto valuations had dropped in recent weeks as investors keep dumping risky assets in a rising rate environment, with Bitcoin (BTC), which recorded its all-time high of $69,000 in November, having lost over 60% of its value since then.
The firm said:
“Recently, the crypto market has seen major fluctuations, and some institutions in the industry have experienced conductive risk events. Due to the current situation, Babel Finance is facing unusual liquidity pressures.”
Crypto lenders gather cryptocurrency deposits from retail customers and re-invest them, announcing double-digit returns and attracting tens of billions of dollars in assets. Nonetheless, the recent crumbling has made lenders fail to redeem their clients’ assets.
Babel Finance has 500 clients and limits itself to Ethereum, Bitcoin, and stablecoins. It raised $80 million in a funding round in May 2022, valuing it at $2 billion. It had ended 2021 with $3 billion of loan balances on its balance sheet.
Buy Bitcoin NowEarlier this week, US-based retail crypto lending firm Celsius Network froze withdrawals and transfers between accounts aiming to “to stabilize liquidity” as the collapse of crypto TerraUSD in May resulted in a rise in redemptions.
