First Celsius, now Babel Finance. Cryptocurrency lending firms have experienced one of their toughest weeks.
Hong Kong-based crypto lender Babel Finance announced earlier today that it has paused withdrawals on its platform. In a blog post earlier today, the firm attributed its latest move to the current market situation.
This latest development comes only a month after Babel Finance raised $80 million to reach a $2 billion valuation.
Babel Finance wrote;
“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. We are in close communication with all related parties on the actions we are taking in order to best protect our customers. During this period, redemptions and withdrawals from Babel Finance products will be temporarily suspended, and resumption of normal service be notified separately. We apologize sincerely for any inconvenience caused.”Babel Finance
Babel Finance’s move also came a few days after another cryptocurrency lender Celsius paused withdrawals on its platform. Celsius is one of the leading cryptocurrency lenders in the world, with more than $12 billion in assets under management.
The pausing of withdrawals by Celsius and Babel Finance, amongst others, indicate the need for self-custody.
Cryptocurrency investors need to be in control of their investments as their funds are safer in their hands than with these centralized entities. With hardware wallets such as Ledger and Trezor, crypto investors can be in full control of their cryptocurrencies and wouldn’t face withdrawal restrictions.
The cryptocurrency space is currently in a bear market, and this has affected numerous companies. Three Arrows Capital, one of the leading crypto hedge funds, is facing insolvency due to liquidations.
Reports a few hours ago revealed that cryptocurrency exchanges FTX, Deribit and BitMEX had liquidated Three Arrows Capital’s positions over the past week. This latest development comes after the crypto hedge fund known as 3AC failed to meet margin calls.
Crypto lender BlockFi confirmed Thursday it recently liquidated Three Arrow Capital’s positions after the firm failed to meet margin calls. The bear market is still in its early days, and only strong projects are expected to survive.