Babel Finance, an Asian-based crypto financial service has now halted client withdrawals amid the turmoil within the crypto space. The Hong-Kong based crypto lender Babel Finance through an announcement on its official website said,
“Some institutions in the sector have experienced conductive risk events”, and for this reason, “Babel Finance is facing unusual liquidity pressures”
Babel Finance, within 3 years of inception reached an outstanding balance of $2 billion worth of crypto with a monthly trading volume of $8 billion. The crypto-lending platform secured $40 million in Series A and recently procured $80 million in Series B. Despite financial success, the business model was under huge suspicion from the beginning.
According to some reports, during the March 2020 crash, Babel Finance allegedly misused its clients’ funds through highly leveraged transactions without their consent. The crash caused the lending company to switch from wealth to platforms and therefore asked Tether, one of its creditors, to extend the repayment period from 48 hours to one month. Tether is accused of maintaining secrecy over its dealings with Babel Finance aimed at depleting Babel’s reserves.
On the other hand, the platform currently is supposed to have recorded a huge 9-digit loss and hence a popular analyst urges the customers to pull out their capital before it’s too late.
The constant hammering on the crypto space that started with the UST, was followed by Celsius Network’s halt to withdrawals and 3AC’s liquidity crunch. Now, when another crypto credit company is facing liquidity issues, it may not be a good sign for the crypto space. According another analystthe entire crypto industry is illiquid enough at this point to pay its customers.
