Crypto Suffers Another Blow: Babel Finance Freezes Withdrawals
Crypto financial services company Babel Finance said it was temporarily suspending withdrawals and redemptions in the latest blow to the cryptocurrency sector.
The Hong Kong-based company said in a June 17 statement posted on its website that “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 statement read. “We are in close communication with all related parties on the actions we are taking in order to best protect our customers.”
During this period, the statement continued, “redemptions and withdrawals from Babel Finance products will be temporarily suspended, and resumption of normal service be notified separately.”
The company’s website describes its vision as “building open financial infrastructure for the future.”
On May 25, Babel Finance closed an $80 million Series B fundraising round at $2 billion valuation.
Babel Finance describes itself as “one of the largest service providers to institutions in the crypto financial markets.”
The company said it limits its business to Bitcoin, Ether — the two largest cryptocurrencies by market value — and stablecoins, and serves a select clientele of about 500 customers.
The news follows Monday’s announcement from Binance, the world’s largest cryptocurrency exchange by volume, that it was temporarily pausing Bitcoin withdrawals.
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Meanwhile, crypto lender Celsius Network announced that it would suspend indefinitely various transactions, including withdrawals of funds
Another Crypto Winter?
And Coinbase Global (COIN) – Get Coinbase Global Inc Report shares have been sliding after analysts at JPMorgan slashed their price target on the digital currency trading platform amid the trillion meltdown in global cryptocurrency markets.
The platform will cut around 18% of its workforce, a level that would eliminate around 1,100 jobs and generate ‘”substantial” reorganization charges.
“We appear to be entering a recession,” which “could lead to another +crypto winter+, and could last for an extended period,” Coinbase said in a blog post. “While we tried our best to get this just right, in this case it is now clear to me that we over-hired.”
JPMorgan analyst Kenneth Worthington lowered his rating on Coinbase to neutral from overweight, while cutting his price target by more than $100 to $68 per share.
And last month, the crypto market was rocked by the collapse of the stablecoin UST or TerraUSD, and the Luna token.
Bitcoin has lost 30.4% of its value in the last week alone, according to CoinGecko, and was recently $20,960.76.
“The news flow has been terrible for crypto,” said Edward Moya, senior market analyst for the Americas with Oanda.”The Texas Securities Board is investigating the Celsius network‘s decision to suspend withdrawals and everyone is expecting restrictive guidelines to quickly make life difficult for crypto-lending firms.”
Moya said that Bitcoin declined “as risk appetite left Wall Street as investors became worried of a much quicker deterioration for the US economy.”
“Surging recession fears are crippling appetite for risky assets and that has crypto traders remaining cautious about buying bitcoin at these lows,” he said