Hong Kong-based Babel Finance temporarily suspended the withdrawals and redemptions of crypto assets on Friday. As the crypto lender scrambles to pay its clients after the recent slump in the digital currency market,
Cryptocurrency valuations have plunged in recent weeks as investors dump risky assets in a rising rate environment. Bitcoin, which reached a record high of $69,000 in November, having lost more than half its value this year.
Recently, the crypto market has seen major fluctuations, and some institutions in the industry have experienced conductive risk events. Because of the current situation, Babel Finance is facing unusual liquidity pressures,” the company said.
Crypto lenders gather crypto deposits from retail customers and re-invest them. Proclaiming double-digit returns and attracting tens of billions of dollars in assets. However, the recent meltdown has lenders to be unable to redeem their clients’ assets. Babel, has 500 clients and limits itself to bitcoin, ethereum, and stablecoins. Further raising $80 million round in funding last month, valuing it at $2 billion. It had ended last year with $3 billion of loan balances on its balance sheet.
Earlier this week, U.S.-based retail crypto lending platform Celsius Network froze withdrawals and transfers between accounts “to stabilize liquidity” as the collapse of cryptocurrency TerraUSD in May triggered a rise in redemptions.