On Friday, Babel Finance officially announced temporarily suspending redemptions and withdrawals from its products, citing "unusual liquidity pressures." That means the firm lacks available assets, forcing it to prevent customers from withdrawing their assets.
Babel Finance's website says, "Recently, the crypto market has seen major fluctuations, and some institutions in the industry have experienced conductive risk events."
In a statement to Cointelegraph, a spokesperson said, "Babel Finance is taking action to best protect the interests of our clients. We are in close communication with all related parties and will share updates in a timely manner."
The Tower Of Babel
Founded in 2018, Babel Finance is a major provider of cryptocurrency financial services. The platform offers institutional investors crypto lending, asset management, and financing services.
Less than a month ago, Babel Finance received a $2 billion valuation, following an $80 million Series B funding round. Accompanying the news, the crypto lending firm coined itself as the "world's leading wholesale crypto financial services provider."
By the end of 2021, the firm had outstanding loans totaling $3 billion with an $800 million monthly trading volume. By then, the firm had also structured and traded over $20 billion in option products.
The Trembling Crypto Firms
By halting withdrawals, Babel Finance joins the growing list of crypto lending firms experiencing major issues in the current market conditions. Crypto lending platform Celsius was one of the first firms to freeze withdrawals, signaling the ongoing crypto lending crisis.
On Thursday, Finblox made a similar move by restricting withdrawals to $1,500 because of its connection with Three Arrows Capital. According to a report by The Block, Three Arrows Capital became the center of insolvency speculation as several leading crypto exchanges liquidated the fund's position.
In fact, the world's largest crypto exchange Binance temporarily paused Bitcoin withdrawals. But after a bit over three hours, the exchange announced resuming Bitcoin withdrawals.
Meanwhile, the plight of Celsius users is still unknown. The Celsius CEO broke the silence saying his team was working around the clock to find a solution. However, there was no mention of when he would resume withdrawals on the platform.