US$2 billion crypto lending giant Babel Finance is following Celsius and Three Arrows Capital (3AC) into potential insolvency amid a liquidity crisis in the crypto industry and pressures such as the collapse of the TerraUSD stablecoin and the suspension of withdrawals at Celsius Network.
Rumors swirled on Saturday about liquidity pressures at Babel, and by afternoon, the platform announced in a statement that it was temporarily suspending withdrawals and redemptions of crypto assets.
“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,” the firm said in the statement.
The firm, which has “a select clientele of about 500 customers” had an outstanding loan balance of more than US$3 billion, average monthly trading volume of US$800 million in derivatives, and had structured and traded more than US$20 billion in options products, as of end-2021.
Dubai-based crypto hedge fund Three Arrows Capital (3AC) is also staring at potential insolvency after liquidations, following Celsius’ announcement last week that it’s suspending withdrawals.
Babel did not respond to Blockhead requests for comments on the situation.
Launched in 2018, Babel started out as a lender to crypto miners in China. It since moved its operations to Singapore, where it now caters to high-net-worth individuals and institutional investors.
Less than a month ago, Babel Finance announced that it raised US$80 million in a funding round that valued the crypto financial services provider at US$2 billion. It said that it was ramping up hiring and looking at expansion in developing nations.
The global market cap for crypto currently stands at US$879.71 billion – down from its November 2021 high of US$2.9 trillion, according to CoinMarketCap data. Bitcoin and Ethereum, currently trading at around US$19,900 and US$1,070, are down about 65% and 75% percent respectively from their November 2021 peaks.