(Bloomberg) — In a sign of deepening turmoil in the crypto community, Babel Finance became the second major digital-asset lender this week to freeze withdrawals, telling clients it is facing “unusual liquidity pressures” as it contends with recent market declines.
“The crypto market has seen major fluctuations, and some institutions in the industry have experienced conductive risk events,” the Asia-based lender and asset manager said in a notice on its website to explain the temporary measure.
The news came just a few days after Celsius Network, another crypto lending platform, paused withdrawals, swaps and transfers. Meanwhile, a tweet this week by Three Arrows Capital, a major crypto hedge fund, raised concerns about financial troubles at the firm, adding to the sense of broadening distress. A recent market downdraft has sent the value of all crypto below $1 trillion, a precipitous drop from its highs of $3 trillion late last year.
A spokesperson at Babel told Bloomberg that the team has faced “some pressure” and “are working on it.”
Just in May, Babel reached a $2 billion valuation in a funding round with investors including Jeneration Capital, 10T holdings. Babel’s website shows that Sequoia Capital and Tiger Global are listed as its current investors.
The firm is one of the largest crypto service providers to institutions, according to a recent news release. The firm manages about 500 clients and limits its business to Bitcoin, Ether and stablecoins. At the end of 2021, the firm had an outstanding loan balance of more than $3 billion.
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