- Babel Finance temporarily freezes withdrawals of cryptocurrencies on Friday.
- The crypto lender failed to pay its clients due to the recent crypto market meltdown.
- Fear from crypto meltdown, withdrawal freezes from firms, and depegging might increase redemptions from other companies.
Babel Finance momentarily freezes the withdrawals and redemption of cryptocurrencies from its platform on Friday. As per the report of CNBC, the action took place after the firm struggled to pay its clients caused by the recent crypto market meltdown.
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The value of cryptocurrencies in the past few weeks has tumbled after the investors dump their assets, due to the fact that the rates are increasing. Bitcoin, the largest cryptocurrency, alone suffered a dump of more than half of its price from its record high of $69,000 in November.Hong-Kong based company said:
Recently, the crypto market has seen major fluctuations, and some institutions in the industry have experienced conductive risk events. Due to the current situation, Babel Finance is facing unusual liquidity pressures.
Babel Finance is a crypto financial service provider that offers crypto lending, asset management, and prime financing to institutions and qualified investors.
Same with traditional banks, crypto lenders gather deposits from retail investors and re-invest them. The retail investors were promised a double-digit returns or captivating annual interest rate returns from depositing with these lending firms. However, the recent crypto market crash led Babel Finance not to return their clients’ assets.
Meanwhile, US-based crypto lending firm Celsius Network halts withdrawals and transfers from accounts “to stabilize liquidity.” Crypto savings app Finblox also reportedly limited its user’s daily withdrawals.
The recent crypto meltdown, withdrawal freezes from firms, and collapse of stablecoins like TerraUSD could lead to an increasing redemptions and further downside in the crypto space.
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