Babel Finance, an Asian lending platform crypto revealed that it was facing liquidity pressures. In response, it suspended all product withdrawals and redemptions on its platform to protect customers.
Babel Finance froze withdrawals due to unusual liquidity pressures.
In a company announcement on Friday, Babel explained the hiatus. In short, his problems resulted from a “significant volatility” in the crypto market.
According to the press release: “Due to the current situation, Babel Finance is facing unusual liquidity pressures. We are in close communication with all related parties about the steps we are taking to better protect our customers.”
As a reminder, Babel, which has 500 clients and is limited to bitcoin, ethereum and to stablecoinsraised $80 million in a funding round last month, the valued at $2 billion. It ended last year with $3 billion in loan balances on its balance sheet.
Over the weekend, the crypto market fell to its lowest level since December 2020. triggered an avalanche of liquidations and even forced microstrategy provide more collateral for your loan silver door.
See also: Circle Announces Launch of New Euro Reserve-Backed Stablecoin, Euro Coin.
A increased settlement risk for lending platforms
As Babel points out, some institutions in the sector have now experienced “favorable risk events”. This put pressure on corporate liquidity. Between these institutions find Celsiusanother crypto lending platform that was forced to suspend withdrawals as it struggled to refinance Oasis loans.
Another is the venture capital firm Three arrows Capital (3AC)which has been dealing with rumors of an impending liquidation for days. Some of the company’s partners revealed that 3AC stopped contacting them. Still, the company’s co-founder says his team is “communicating with relevant parties.”
The news comes later Binancethe largest cryptocurrency exchange, announced on Monday that bitcoin withdrawals suspended.
In fact, crypto lending platforms often use digital asset collateral to use loans in the D-space.eFi. That with the purpose of warranty user deposits for higher returns. However, in times of market downturn, these loans are exposed to increased liquidation risk.
To find out: Binance plans to re-enter the Korean market after a 2-year hiatus from its services.
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