Fall of cryptocurrencies: the CeFi Babel Finance service in turn blocks withdrawals

CeFi in turmoil – Since a few weeks, Bitcoin and other cryptocurrencies recorded significant declines. Faced with this collapse, many players in the ecosystem have revealed that they are encountering major liquidity problems. After Celsius or even Three Arrow Capital, it is the turn of Babel Finance to pay the price. Thus the company announced the suspension of withdrawals.

Babel Finance pauses withdrawals

BabelFinance is an Asian service of CeFi (centralized finance) launched in March 2018. It offers its users various financial products in the field of cryptocurrencies, such as loans or savings. Thus, users can earn returns by depositing cryptocurrencies on the platform. Obviously, once deposited, the funds are fully controlled by the platform.

However, like multiple CeFi service operators, Babel Finance has been hit hard by the general decline in crypto markets.

Thus, on June 17, the company announced that “redemptions and withdrawals of Babel Finance products will be temporarily suspended”. Therefore, users are no longer able to withdraw their funds from the platform until further notice.

In the announcement published on the official blog, Babel Finance explains blocking withdrawals in order to protect its users. Once is not custom, Babel explains encountering problems in terms of liquidity.

“Due to the current market situation, Babel Finance is facing unusual liquidity pressures. We are in close communication with all relevant parties on the actions we are taking to best protect our customers.”

On the side of investors, panic is beginning to be felt. Indeed, the latter fear that Babel Finance will not be able to face this crisis. The consequences could be dramatic and users may not see their precious cryptocurrency again.

>> Bitcoin fluctuates, that’s also why we love it! Embark on the FTX benchmark platform (affiliate link) <<

Babel Finance joins Celsius and Three Arrow Capital

Obviously, Babel Finance is not the only crypto service being impacted by the market downturn.

In fact, the company Celsius has been in the spotlight for more than a week after announcing the suspension of withdrawals on its lending platform. Thus, the company is also facing significant liquidity problems. Since then, it has tried somehow to maintain its different positions. Indeed, Celsius has repeatedly added funds to increase the collateralization factor of several of its cryptocurrency loans.

A few days after Celsius’s announcements, the FUD (Fear Uncertainty Doubt) hit investment fund Three Arrow Capital. In total, it recorded more than $400 million in liquidations on several of its DeFi loan positions. A situation which continues to deteriorate and which was initiated by the fall of the UST of Terra Luna, on which the fund was largely exposed.

Unfortunately, this phenomenon may well continue to spread to other CeFi players.

As Sami recently reminded, it would be prudent to withdraw your funds from so-called CeFi platforms before these in turn freeze the assets.

Tweet from Sam_Jdc.
Tweet from Sam_Jdc.

For its part, Celsius is trying everything for everything. Indeed, the company requested the help of the CitiGroup bank to obtain strategic expertise to manage this crisis situation.

The bear market and its consequences have not dampened your enthusiasm for cryptos? Register without delay on the FTX benchmark exchange platform. In addition, you benefit from a lifetime reduction on your trading fees (affiliate link, see conditions on official website).

Leave a Comment