on the crypto
Babel finance, a Hong Kong-based crypto-financial services provider, joins the list of companies struggling to cope with the current bear market. On Friday, the company announced a temporary suspension and redemption of digital assets.
Why Babel suspends withdrawals
The company is heavily impacted by the current bearish conditions in the cryptocurrency market. Because of this, he struggled to pay his own Investors. Babel finance joins the list of cryptocurrency lending companies struggling to cope with the chaos of the cryptocurrency market.
According to various media reports, the digital asset lender said he was experiencing "extraordinary liquidity pressure". As a result, he had no choice but to make this announcement. Bitcoin has lost over 60% of its value since it hit an all-time high of $ 69.000 last November. Investors continue to sell off their risky assets (including Bitcoin) following tighter monetary policies by central banks.
Is another cryptocurrency company on the verge of collapse?
An official statement from Babel Finance reads that:
we have uncommon liquidity pressures. Strong market volatility has contributed to creating risky situations for all institutional players in the cryptocurrency market, including us.
It seems that the succession of cryptocurrency company crashes isn't going to end anytime soon. Every day there are reports of one or more cryptocurrency companies collapsing or on the verge of collapse. Three Arrows Capital's recent insolvency problems are still fresh on investors' minds.
Following the uncertainty of Three Arrows Capital, one of its subsidiaries (Finblox) announced that monthly withdrawals on its platform are now limited to $ 1.500. It also announced that it will no longer offer the distribution of incentives.
Can Babel finance find a quick solution to its liquidity problems?
Babel finance woes suggest that many cryptocurrency lending companies are suffering from the current bear market in cryptocurrencies. However, the cryptocurrency lending company revealed that it is in discussions with all interested parties to find a solution and protect its customers. Last month, Babel raised $ 80 million in Series B funding based on a $ 2 billion valuation.
It is important to note that the company's outstanding loans increased by $ 1 billion between February and December 2021. Each Babel derivatives trading operation exceeds $ 800 million. Since its inception, the company has traded in options contracts worth over $ 20 billion.
Babel Finance isn't the only cryptocurrency company that has been blocking withdrawals in recent times. Earlier this week, Celsius announced the suspension of digital asset withdrawals and swap and transfer products. Celsius's announcement revealed the growing lending problems cryptocurrency lending platforms face.
Following Celsius's announcement, the price of its token plummeted by 50% within 24 hours. Additionally, major cryptocurrency exchange Binance has suspended Bitcoin withdrawals, citing network congestion. The crash of the Earth network and the continued decline in the price of Bitcoin suggest that neither of the two aforementioned cryptocurrency companies could recover anytime soon.
