Babel Finance suspends withdrawals due to “unusual liquidity pressures” Abdulrasaq Ariwoola · 21 seconds ago · 2 min read
The crypto finance provider is pausing withdrawals and redemptions in response to harsh market conditions.
2 min read
Updated: June 18, 2022 at 3:49 pm
Cover art/illustration via CryptoSlate
As the crypto winter prolongs, its effects are rippling into different areas of the crypto ecosystem and forcing difficult decisions. Several crypto companies face liquidation risks, cutting their workforce and pausing user activities on their platforms to stay afloat.
The latest in a myriad of stoppages in operation is Babel Finance which served a public notice on June 17, 2022, to its users.
The notice carried information that fluctuations in the crypto market have resulted in the company “facing unusual liquidity pressures.” The company stated further that it is in close communication to ensure the protection of its customers.
As a result, “redemptions and withdrawals from Babel Finance products will be temporarily suspended,” the notice read. However, it assured that the resumption of the service would be notified separately without failing to say when.
@FatManTerra weighed in on the notice and claimed Babel is “currently facing nine-figure losses.”
A verified source has confirmed that Babel Finance, a large Chinese crypto management fund, is currently facing nine figure losses – Babel customers & counterparties, please pull out your capital for the time being if you are able to.
— FatMan (@FatManTerra) June 17, 2022
He tweeted that while Babel has not yet liquidated, the idea is considered.
The crypto finance provider raised $80 million in a new investment round in May, takings its valuation to $2 billion. Jeneration Capital, Circle Ventures, and 10T Holdings joined current investors Dragonfly Capital and BAI Capital in the investment round.
Crypto institutions taking hard hits
Several cryptocurrency companies have made public headlines as they struggle to guard against rapidly depleting valuation. Since the start of Q1 2022, the entire crypto market has plunged, which has seen major cryptocurrencies fall drastically.
As per a recent report, rival crypto service provider Finblox also issued a statement informing users of new restrictions on its platform, which includes a pause on rewards and a limit on daily withdrawals, owing to its connections with Three Arrows Capital.
Celsius, which had garnered the most attention, made a similar announcement on June 12 to pause withdrawals, swaps, and transfers.
Likewise, Three Arrows Capital is the subject of insolvency speculations amidst rumors of impending liquidation.
Belgian Banking Group KBC Creates Blockchain-Based Coin
KBC Group, a major European banking and insurance institution headquartered in Belgium, has launched a token based on a blockchain platform. Its customers will be able to acquire the new proprietary coins and use them through their KBC wallet and mobile app.
KBC Issues Digital Coin for Clients and Partners
KBC, the Brussels-based financial group with extensive presence in Central and Eastern Europe, has announced its own crypto called ‘Kate Coin.’ The bank said it’s preparing a large-scale test of the token, with the participation of thousands of employees who will be able to spend it at a festival in Belgium this week, and it will eventually roll it out throughout the group.
The coin comes a year and a half after the launch of Kate, KBC’s personal digital assistant. In a press release, the company noted that a whole new economy is now developing on the basis of technologies such as web 3.0, cryptocurrencies and non-fungible tokens (NFTs). With its latest initiative, KBC wants to enter this new world and confirm its position as a leader in digital banking insurance.
As a bank-insurer, KBC is focusing on private clients and small to medium-sized enterprises in Belgium, Bulgaria, Hungary, Slovakia, and the Czech Republic. Its customers will be able to acquire Kate coins and use them via their digital wallets and mobile accounts.
The token will initially be available in KBC’s ‘closed loop’ banking and insurance environment. Eventually, it will be introduced into a wider ecosystem, which includes some KBC enterprise customers, third parties and partners that are offering services through the bank’s mobile platform to 1.8 million users.
“Powered by the digital assistant Kate, the Kate Coin will proactively make life easier for our customers throughout the KBC group, today and in the future. The combination of the digital assistant Kate and the Kate Coin will enable KBC customers to save time and money,” KBC Group said in a statement published Thursday.
This isn’t the first time a large banking corporation creates its own digital currency. In 2020, the global investment bank and financial services company JPMorgan announced its own crypto, JPM Coin, also based on blockchain technology and enabling payments between institutional clients.
Tags in this story
Bank, Banking, Belgian, belgium, Central Europe, COIN, Crypto, Cryptocurrencies, Cryptocurrency, Eastern Europe, Europe, financial company, Insurance, insurer, Kate, Kate coin, KBC, KBC Group, Token
Do you expect other major financial companies to issue their own digital coins? Tell us in the comments section below.
Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.
Image Credits: Shutterstock, Pixabay, Wiki Commons, Lithuaniakid
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Fed hikes interest rate by 75 basis points; Bitcoin continues to trade above $20,000
Fed hikes interest rate by 75 basis points; Bitcoin continues to trade above $20,000 Liam ‘Akiba’ Wright · 6 hours ago · 2 min read
Bitcoin › Price Watch
Crypto market remained stable following the US Federal Reserve’s decision to raise interest rates will be raised by 75 basis points.
2 min read
Updated: June 16, 2022 at 1:42 am
Cover art/illustration via CryptoSlate
The Federal Open Market Committee has raised interest rates by 75 basis points, increasing the primary credit rate to 1.75%. The crypto markets remained largely stable following the news as the rate hike had been hinted at in media reports.
According to the Summary of Economic Projections in the US Federal Reserve’s June 15 statement, the fed funds rate is expected to be above 3% by year-end and close to 4% by the end of 2023, above prior estimates, The rate is expected to settle back below 3.5% in 2024.
Bitcoin, the world’s largest cryptocurrency by market cap, is currently trading at around $20,500, following the news after dropping to almost $20k earlier in the day. Amid the chaos related to Celsius and 3 Arrow Capital, the crypto markets are extremely volatile at the present time.
Bitcoin and Inflation
The short-term ability for Bitcoin to act as an inflation hedge was invalidated earlier this year as the previous rate hikes — 25 basis points in March and 50 basis points in May — to counter rising inflation, have done nothing to bolster its price. Earlier this month it was reported that inflation in the US has reached a high of 8.6%, the highest level in almost 40 years.
CNBC reported that the rate hike was expected to be the biggest in 28 years at 75 basis points. The news outlet stated that “[Powell] and other officials had been pushing the narrative that consecutive rate increases of 50 basis points would be the most likely course.”
Powell has previously played down the need for a 75 basis point rate hike, stating that raising rates by that much at a time “is not something the committee is actively considering.”
The effect on Crypto
Rates increasing affect the cost of borrowing which has a direct impact on many cryptocurrency investors. While the increase may not have an effect on the cost of DeFi borrowing, those using traditional finance for cryptocurrency purchases could run into issues if the cost of borrowing becomes unsustainable.
The use of leverage in trading is common in cryptocurrency even among major players. Celsius has been rumored to have run into trouble due to owning an under-collateralized loan following the recent market sell-off.
The immediate consequence on the price of Bitcoin and other crypto-assets may well be reversed in the short to medium turn. During previous Fed announcements, Bitcoin has initially reacted positively before retracing within 24 hours.
Regarding inflation and interest rate hikes, Bitmex recently released a post saying that
“Trying to be tactical and time markets is widely regarded as a fool’s errand. This is now the prevailing narrative, with passive funds and automated algorithmic strategies leaving active fund managers and stock pickers in the dust. It is time to turn off the machines and sell the index trackers, you will have no choice. Buy Bitcoin at $20,000. Play the game!”
Bitmex also stated that it expected the recovery from inflation “could take five or ten years to play out.”
Tether claps back at rumors surrounding its commercial paper portfolio
Tether claps back at rumors surrounding its commercial paper portfolio Abdulrasaq Ariwoola · 12 hours ago · 2 min read
Tether stated that commercial papers constitute less than 25% of USDT’s backing, adding that it does not have lending exposures to Celsius and Three Arrows Capital.
2 min read
Updated: June 15, 2022 at 6:12 pm
Cover art/illustration via CryptoSlate
Tether has released a statement to counter reports making rounds about its commercial paper portfolio.
The rumors claimed that Chinese or Asian commercial papers made up 85% of the firm’s commercial paper portfolio and were being traded at a 30% discount.
In the June 15 statement, the firm said:
“These rumors are completely false and likely spread to induce further panic in order to generate additional profits from an already stressed market. Tether condemns such attempts which oftentimes see simple users take the biggest hit, while few coordinated funds increase their profits.”
Tether’s commercial paper portfolio
The stablecoin issuer referenced its latest assurance opinion as proof of what its reserves consist of, noting that over 47% of total USDT reserves are now US Treasuries and that commercial paper makes up less than 25% of USDT’s backing.
Regarding its commercial paper portfolio, the company said:
“Tether can report that its current portfolio of commercial paper has since been further reduced to 11 billion (from 20 billion at the end of Q1 2022) and will be 8.4 billion by the end of June 2022. This will gradually decrease to zero without any incurrences of losses. All commercial papers are expiring and will be rolled into US Treasuries with a short maturity.”
The company also disputed claims that it had lending exposures to Celsius and Three Arrows Capital, deeming such rumors “categorically false.”
The stablecoin last year raised concerns after it announced that it had bought a large amount of commercial paper. However, it didn’t disclose the names or the location companies from which it acquired the paper.
Continued crypto winter
The crypto winter has hit Tether’s USDT, the biggest USD-pegged stablecoin. It temporarily depegged on Monday but has now risen to $1.00, data from CoinGecko reveals.
Tron’s algorithmic stablecoin USDD, unlike the USDT, has remained depegged since Monday. Other stablecoins such as Binance USD, TUSD, and USDN also experienced similar changes in price as the extreme sell-off continued in the crypto market.
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