Money and Markets

Another crypto lending platform is freezing withdrawals as the industry's downward spiral continues

Business Insider US
A trader works at the New York Stock Exchange NYSE in New York, the United States, on March 9, 2022.
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  • Crypto lender Babel is freezing withdrawals for users due to "unusual liquidity pressures."
  • It's the second major platform to do so this week as the crypto market faces a massive selloff. 
  • Celsius previously stopped letting customers withdraw their holdings on Sunday.
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Another major crypto lending platform has stopped letting people take out their holdings.

Babel Finance, which is based in Hong Kong and boasts a customer base of 500, said Friday that withdrawals from its services will be "temporarily suspended" as cryptocurrencies face a brutal and widespread selloff.

"The crypto market has seen major fluctuations, and some institutions in the industry have experienced conductive risk events," Babel said on its website. "Due to the current situation, Babel Finance is facing unusual liquidity pressures."

Babel did not immediately respond to Insider's request for comment.

The firm was last valued at $2 billion in May, Reuters reported, and only allows the trading and lending of bitcoin, ethereum, and stablecoins.

It's also not the only lending platform to halt withdrawals as liquidity pressures mount amid a worsening market rout. 

Celsius Network said Sunday that it was doing the same for its 1.7 million customers, citing "extreme market conditions." 

Celsius users told Insider this week that they're anxious about their holdings currently trapped on the platform. One user said he has $105,000 worth of crypto stuck on the app. Another said she may have lost two years' worth of income.

The price of bitcoin, still the largest and most well-known cryptocurrency, has declined 70% from a November 2021 peak. The slump has dragged down the entire market's value below $1 trillion for the first time since February 2021. 

The rout's also impacted hedge funds like the 10-year-old, crypto-focused Three Arrows Capital, also known as 3AC. The firm has hired "legal and financial advisers," the Wall Street Journal reported, following massive losses sparked by a major investment in stablecoins that later tanked. 

3AC is also now faced with $400 million in liquidations, according to The Block. 

Founders Zhu Su and Kyle Davies, meanwhile, have "ghosted" their business partners as they grapple with concerns over insolvency, Vice reported.

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