/biz/ - Business & Finance

Hong Kong-based crypto lender Babel Finance has suspended withdrawals and redemptions, according to an announcement on the company's website.
"Babel Finance is facing unusual liquidity pressures," the statement reads, before alluding to major fluctuations in the market and "conductive risk events" among institutional market participants.

Last month, Babel raised $80 million in a Series B round with a valuation of $2 billion.

At the end of 2021, Babel Finance had an outstanding loan balance of over $3 billion, up from $2 billion the previous February. It averaged $800 million in monthly derivatives trading volume and had structured and traded over $20 billion in options products.

On Thursday, rival staking platform Finblox made a similar decision, restricting withdrawals to $1,500 per month due to its connection with Three Arrows Capital.

Three Arrows Capital has found itself at the center of insolvency speculation, with several leading exchanges liquidating the fund's positions, according to a report by The Block.

>>49741732
>How does this keep happening?
They're all using fractional-reserve systems. They don't actually keep all the bitcoin you deposit; they instead loan it out. They keep most of their own assets in crypto, rather than cash, and now that the value has dropped, they aren't getting returns on their loans and they don't have the money to buy back enough replacement crypto for their users to withdraw.

>>49741732
Are you retarded? Is like this your first "bankrun"? Damn we still have long way to go to the bottom if retards like you are still holding into the crypto space.

Go lose all your money and leave so we may finally find a bottom, fucking retarded faggot.

>>49741833
Bottom? Thinking about buying the dip.

>>49741917
You are a fucking retard. Go lose all your money. Wojak post about "WHY IS BTC AT $10000 I WENT BALLS DEEP AT $20000! AARGHHH" you retarded double digit IQ philistine

>>49741732
>literally cannot redeem

>>49742066
Enjoy inflation eating up your mcwage savings

It's called a "bank run". Trad fi have regulations and support mechanisms in place to deal with this kind of thing. Welcome to the decentralisation. Enjoy your stay and thanks for playing.

>>49741823
"fractional reserve" is bank-specific terminology. there is no loan involved.
you mean leverage. they are BORROWING money to be able to generate a return on their customer's deposits, because there is no business function. this is essentially forex. they also have to pay for their customer's withdrawals, which can cause them to either borrow more money, or sell assets, or both.
reserves, by contrast, are the collateral that the banking system requires of a bank so it can ISSUE credit.

>>49741732
They don’t know where your money is

>>49742125
Inflation is around 10, btc dropped 70%
Baghooder cope

>>49742194
REPORTED inflation. This is just a temporary shakeout in the crypto markets. Everyone has the jitters due to inflation. Must suck ass to be scared all the time.

>>49742132
>Trad fi have regulations and support mechanisms in place to deal with this kind of thing.
no they don't, they have mechanisms in place to lull you into a false sense of security.
if everyone went to take their money out of the banking system right now today, the FDIC would simply close the banks and force people to wait in line in an orderly fashion. it's the same as these places, suspending withdrawals.
the FDIC has something like 10% of all deposits actually available in reserve. the rest would have to be printed, but the government doesn't just up and do that because they know they would have social upheaval within weeks. during the GFC, the FDIC had only 1% of all banking system deposits ready in reserve.
the "I" in FDIC is not lying to you. it's literally just "Insurance." it can fail you the same way GEICO can fail you.
look to this 2008 example from the UK for what would likely happen if the US system were ever tested for real: https://en.wikipedia.org/wiki/Nationalisation_of_Northern_Rock

>>49742254
Is not about being scare all the time but understanding how markets work and are all interconnected.

You want to know why everything went to shit? Easy Big money is pulling out of every single asset class they own. You can fill the rest by yourself if you aren't 12 or have the intelect of a child. If you can't maybe you should leave crypto because this environment was never ment for retards like you unless you provide exit liquidity. If you want to fullfil your role, be my guess.

>>49741750
>Hong Kong-based
...........

>>49741154

>>49741823
>>49742135

Every single thing that is failing right now is a centralized solution. And its going the same way every time, that the centralized managers can't respond fast enough to shore up liquidity when there is a bank run.

What is impressive is that no defi projects are failing this way. Because everything is automated. As soon as liquidity runs low then borrow rates are instantly jacked up, collateral can be instantly liquidated.

FUDers are saying this is why crypto sucks or why crypto needs regulation but it actually shows the complete opposite. Defi is kicking the absolute shit out of cefi right now.

>>49741732
>How does this keep happening?
I wonder...

>>49742132
Yeah, like restricting withdrawals

>>49742258
Bank runs are of course a thing in a jew-dominated system, but now, imagine them in the age of the Negro: less queuing, more (hiv+) blood.

>>49742132

These fake "crypto" banks are "trad fi." They are not decentralized. And no matter how much regulation you have, if a bank doesn't have liquidity then you can't withdrawal.

But defi protocols, take aave for example, have regulation - their open source code. Rates are automatically increased when liquidity is low. Borrowers are automatically liquidated far before they become undercollateralized. The entire system is transparent, anyone can see exactly how much liquidity there is, what debt is outstanding, and under what collateral.

That's why actual defi platforms have been so much more resilient than cefi - and all without government regulation because the regulation is the code, its a complete fair and transparent system. Not like cefi where you have to trust the company not to fuck up and you have no clue where the money is or what the risk it.

>>49741732
>How does this keep happening?

Because everyone has millions locked up in ETH2 staking and illiquid, meanwhile users are trying to withdrawal all their ETH due to bear market

>>49742537
>Defi is kicking the absolute shit out of cefi right now.
name some trustless yeild protocols then asshole
and dont fucking say hex

>>49742997
this, also. good point.
the blockchain is distributed. it's not decentralized.
a decentralized system is where truth or trust (and in this context, cold hard cash) is not in one single place, ever. a distributed system is one where majority consent must happen over what the central truth will be, and therefore every node can have a copy of the truth, and therefore the system can "slide" across the network as nodes are born and others die.
but a decentralized system would have entire chunks of its ledger/truth in many different locations. you, the user, would have to choose to trust any of multiple authorities, in order to participate. it would be up to you, sort of like how HTTPS server certificates work; there are several root CAs on your computer and people who run websites can choose from any of them for their cert.
"DeFi" literally doesn't exist in crypto. hawala banking is decentralized. go look it up.

>>49743087

aave is the biggest defi lending platform, but there are dozens. A site like defillama will list them all. And projects have varying degrees of decentralized government, but in principle the mechanisms of the protocol operate in a transparent way. In aave you can see exactly how liquidity is there, the entire balance sheet is transparent. So there is no panic because everything adjusted automatically. Liquidity is public and rates go up when liquidity starts getting low. Its not like cefi where they market themselves as super duper safe when they really have a fucking disaster on the balance sheets and get bank run when the facade of safety is ripped away.

>>49741732
Digital Bankrun.
Everyone/too many rush to try and withdraw all at once due to the falling value of BTC, the exchange can't AFFORD to give up that money, they don't have that much money to give.
So they freeze assets, your bitcoin isn't really yours and they can just say 'no' when you want it back, just like money in banks can be subject to similar situations.

It's a VERY bad sign for the market if this is happening, it means large amounts of money are exiting (or attempting to exit) the trading market.

>>49743087
proton has a good one, it's not super high but it's not a con to rip people off.

>>49743449
>>49743803
thank you
sorry for swearing at you, its been a bad week

>>49743928
Get some time outside, take in some nature, that should help.

nice

>>49741732
>picks name babel
>arrogantly builds cefi into defi
>comes crashing down

poetic justice

>>49741732
thanks for playing

This really isn’t fair. Is there anything that can be done to backstop the company? What about Babel? Other financial institutions have been bailed out. So should these

>>49746155
Companies won't be bailed out this rounds. They're going to be bailed in and your assets will be frozen in the process.

>>49746155
None of these are too big to fail. And in fact a lot of people in power are happy to see them to so.

Add Finblox to the list. How much longer?

>”Insurance scope is limited, limitations apply”
Wat?

>>49746691
Explain this

>>49743449
tnx for info.

>>49741823
>>49741833
get in here faggots >>49746043

who was dumb enough to put money in those protocols

>>49741823
Seems like all these cefi places are actually fractional ponzis, seems very easy to do and lucrative when its a bull market. Problem starts in a bear when lots of users want to sell

>>49741732
>What’s going on? How does this keep happening?
it's called Contagion. From the LUNA scam collapse.

>>49746602
AHAHAHAHHAHAHAHAHAHAH IT'S FUCKING REAL TIME NOW