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 industry have experienced a 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 2020 March crash, Babel Finance was reportedly misusing clients’ funds through highly leveraged transactions without their consent. The crash had the lending firm from riches to rigs and hence seek Tether, one of its creditors to extend the repayment period from 48 hours to one month. Tether is accused of maintaining the secrecy of its dealings with Babel Finance aiming to drain 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 hammer on the crypto space that began with the UST, was followed by Celsius Network halting withdrawals and the 3AC liquidity crisis. Now when another crypto lending firm is facing liquidity issues it may not be a good sign for the crypto space. According to another analyst, the entire crypto industry is quite illiquid at this point to pay out their customers.