Entries related to Babel Finance

June 15, 2023

Texas securities regulator alleges in cease-and-desist that Abra crypto lender has been insolvent for months

In an emergency cease-and-desist issued on June 15, the Texas State Securities Board alleged that the Abra crypto lending firm was "insolvent or nearly insolvent" as of interviews conducted on March 31. The filing alleged that Abra and its founder William Barhydt had made investment offerings that were materially misleading, accusing them of securities fraud. Despite not contesting securities regulators' conclusion that Abra was insolvent, Abra repeatedly posted statements on social media such as the one on June 11, where they wrote "Abra is not bankrupt".

According to the complaint, although Abra claimed it stored customer funds with the Fireblocks crypto custodian, they had actually been "secretly transferring assets" to Binance.

The regulator also alleged that Abra had around $30 million in assets with Babel Finance, $30 million with Genesis, and $10 million with Three Arrows Capital — three companies in various stages of liquidation or bankruptcy. They also have $8.8 million with Auros, a firm that was in liquidation but has since exited the process.

July 29, 2022

Restructuring plans reveal Babel Finance's $225 million losses during crypto market dip

(attribution)

Babel Finance, a crypto lender that suspended withdrawals in mid June, sustained "massive losses" thanks to its proprietary trading desk, which was trading with customer funds. According to a restructuring plan viewed by Bloomberg, Babel's prop desk lost around 8,000 BTC and 56,000 ETH, valued at around $225 million at the time of the loss. The trading team was not using risk controls, and their unhedged position led to forced liquidations that made Babel's lending and trading departments unable to meet its margin calls from counterparties like Zipmex.

"Troubled Crypto Lender Babel Lost Big While Trading Client Funds", Bloomberg

July 20, 2022

Zipmex indefinitely halts withdrawals

(attribution)

Singapore-based crypto exchange Zipmex is the latest in a long string of crypto platforms to suspend customer withdrawals. "Due to a combination of circumstances beyond our control including volatile market conditions, and the resulting financial difficulties of our key business partners, to maintain the integrity of our platform, we would be pausing withdrawals until further notice," they wrote on Twitter.

According to CoinDesk, Zipmex faces an enormous loss on a loan of $100 million worth of assets to Babel Finance, an exchange that suspended withdrawals in mid-June and is now hiring restructuring attorneys.

On July 21, the Thai Securities and Exchange Commission sent a letter to Zipmex asking them to explain their decision, requesting details on customer assets under custody and where they were invested — particularly around any assets deposited in Celsius or Babel Finance.

June 17, 2022

Babel Finance suspends withdrawals and redemptions

(attribution)

Babel Finance is the latest crypto finance platform to suddenly limit customer withdrawals. Citing "unusual liquidity pressures" and "conductive risk events" to crypto institutions, Babel announced that they would be "temporarily suspending" redemptions and withdrawals for an indeterminate period. Babel Finance had just completed a $80 million Series B round, with a valuation of $2 billion, in May.

Some in the crypto space have been encouraging people to withdraw their funds from any type of staking or lending platform, as liquidations and failures to repay debt spreads through the tightly-interconnected ecosystem. On June 16, yield farming platform Finblox implemented a very low cap on the amount of funds customers could withdraw, citing exposure to the apparently insolvent Three Arrows Capital.

"Babel Finance Suspends Withdrawals, Citing 'Unusual Liquidity Pressures'", CoinDesk
Notice from Babel Finance