Babel Halts Withdrawal Citing Liquidity Pressures

Babel Halts Withdrawal Citing Liquidity Pressures following Celsius withdrawal suspension announcement.

In less than a week after crypto firm Celsius halted user withdrawals, another crypto lender followed suit. Major cryptocurrencies have plummeted in recent weeks, with bitcoin trading at 70% below its all-time high.

According to a Friday announcement from Babel Finance, the Hong Kong-based crypto financial services provider has ceased redemptions and withdrawals from all of its products.

Babel,Liquidity Pressures
Photo Credit: Ethereum World News

According to the firm, Babel, based in Hong Kong, was founded in 2018 and just raised $80 million in a Series B fundraising round. Jeneration Capital, 10T Holdings, and current owners Dragonfly Capital and BAI Capital are the key backers of the new capital infusion. Circle Ventures and a number of Asian family offices are among the other investors. To date, the company has raised $120 million in equity investment.

Babel has grown from a cryptocurrency lending company aimed at miners and others to a full-service crypto asset management for institutional investors. It now provides crypto lending, borrowing, and portfolio management to a group of 500-plus companies and high-net-worth individuals.

Since the cryptocurrency industry is notoriously unpredictable, asset managers like Babel are under even more pressure to keep their balance sheets in good shape. Babel’s funding comes from its own resources and “global institutional funding sources,” the Founder added.

Babel, like other strong crypto businesses, is now investing in early-stage businesses with its own venture capital funds. It has invested in over ten startups focused on crypto finance, brokerage and trading, and decentralized finance (DeFi) since 2020, although it did not specify which ones.

Babel has “relevant businesses” licenses in Luxembourg, Hong Kong, and the United Kingdom and is working with regulators in Singapore, the United States, Australia, Dubai, and Hong Kong to obtain others. It’s one of many crypto companies that have recently built offices in Singapore, vying with Hong Kong for the title of Asia’s crypto center.

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Wand said, “Singapore is drawing major industry players from the world. Singapore’s dependable legal system, prestigious wealth management industry, and pioneering approach to crypto regulation make it an excellent launchpad for a business headquarters to serve global clients.”

Considering Babel “has no exposure” to the coins and limited its operations to bitcoins, ethers, and specific stablecoins, the recent fall of Luna and stablecoin UST had “no impact” on the firm’s business. At the end of 2021, the startup claimed to have a loan amount of over $3 billion and an average monthly derivatives trading volume of $800 million. It has structured and traded options contracts worth more than $20 billion.

The cryptocurrency market hit its lowest level since June 2022, with bitcoin (BTC) trading just above $20,000 and ether (ETH) holding the psychological support level of $1,000. The market has been hammered by negative sentiment, which worsened earlier this month when crypto lender Celsius halted withdrawals.

Babel Finance has joined the growing list of crypto lending companies suffering serious challenges as a result of current market conditions by stopping withdrawals. Celsius, a cryptocurrency staking and lending platform, was one of the first to recognize the ongoing crypto lending issue, stopping withdrawals on its platform on Monday.     

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