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The Almighty Buck

Babel Finance Suspends Withdrawals, Citing 'Unusual Liquidity Pressures' (theblock.co) 80

Posted by msmash from the oops dept.
Babel Finance, the Asia-based crypto financial services firm, suspended client withdrawals five days after a similar move by Celsius triggered a fresh bout of turbulence in crypto markets. From a report: "Due to the current situation, Babel Finance is facing unusual liquidity pressures," Babel said in a notice on its website on Friday. "During this period, redemptions and withdrawals from Babel Finance products will be temporarily suspended." A spokesperson for Babel said it's taking action to best protect the interests of clients. The firm promised a follow-up announcement once normal service has resumed.
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Babel Finance Suspends Withdrawals, Citing 'Unusual Liquidity Pressures' More

Babel Finance Suspends Withdrawals, Citing 'Unusual Liquidity Pressures'

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  • Don't worry (Score:5, Funny)

    by RobinH ( 124750 ) on Friday June 17, 2022 @09:43AM (#62627898) Homepage
    Depositors, don't worry. Your "money" has been safely offloaded into a safe haven: it's been "liquidated" and stored in my personal numbered and untraceable bank account overseas. Unfortunately this has caused some "unusual liquidity pressures." Please stand by while we flee the country.

    • Re:Don't worry (Score:5, Interesting)

      by LatencyKills ( 1213908 ) on Friday June 17, 2022 @09:48AM (#62627916)

      While I appreciate the sentiment, I think a more likely explanation is that they themselves were gambling customer assets in crypto assets, and as the whole thing flushes down the drain, there simply isn't any money anywhere. It's like if you went to Vegas, and next to you at the roulette table was the casino owner, putting everything on red and you're on black. What, you won? Sorry, management has no money with which to pay you. Separately I'll admit that gambling is a poor metaphor for crypto, because in gambling at least has known odds and is backed by real assets (the casino, their property, and ultimately the USD).

      • Re:Don't worry (Score:5, Insightful)

        by RobinH ( 124750 ) on Friday June 17, 2022 @09:53AM (#62627944) Homepage
        There's also the fact that we're moving from a time of inexpensive borrowing to a time of more expensive borrowing. It used to be that you could grow rapidly just by borrowing money at near zero interest rate and pay the tiny interest expenses with money from new accounts while you expanded. But capital is drying up around the world (aka a "liquidity" drop) and you can no longer play that game. Interest rates go up, they have to use real cash reserves to pay it to stay in business, and now when someone wants to cash out, they don't have the cash.

      • Re: (Score:2)

        by Alumoi ( 1321661 )

        ...because in gambling at least has known odds...

        Yeah, the house always wins. So, like crypto.

        • And it seems just like a typical gambling spree. Someone keeps winning and winning, then throws everything they have because they had some cool gains... and wound up losing their shirt. Happens all the time at casinos. At least casinos are regulated, so if someone does put their stack of chips on "00" on the roulette wheel, and wins it, the house has to pony up, unlike crypto where an exchange can just close up shop... or get "hacked", and all their assets drained.

      • While I appreciate the sentiment, I think a more likely explanation is that they themselves were gambling customer assets in crypto assets

        That, and buying luxury items with other people's savings because "Why would everybody sell at the same time? Crypto only ever goes up!"

      • Re: (Score:2)

        by tlhIngan ( 30335 )

        While I appreciate the sentiment, I think a more likely explanation is that they themselves were gambling customer assets in crypto assets, and as the whole thing flushes down the drain, there simply isn't any money anywhere. It's like if you went to Vegas, and next to you at the roulette table was the casino owner, putting everything on red and you're on black. What, you won? Sorry, management has no money with which to pay you. Separately I'll admit that gambling is a poor metaphor for crypto, because in

    • I'm still watching for bitcoin to drop below $20,000.

      The "buy at $20,500" bots will eventually run out, and when they do... that's when the popcorn finally hits the microwave.

      • I'm starting to appreciate that what gives a currency its value is the psychological force so to speak of all the people who decide to take it seriously and stand behind it. Crypto has some of that force, at least it used to, but does it have enough of it to stay at $20K or $10K or even $1K?

        My guess is not -- the people who wanted to seriously use it as currency (and that includes the criminals) seem to be in the clear minority compared to all the speculators.

        • Looks like we're down to the "buy at $20,400" bots this morning.

          (More proof that Bitcoins is about speculation, not currency.)

          • And... bingo! The bots got turned off at 8:50am and the whole system collapses.

            Interesting that all the bots turned off simultaneously. It's almost as if a tiny group of coordinated individuals is behind Bitcoin, not a diverse spread of ordinary people all across the globe.

            • The next big problem with Bitcoin is that it only supports about 5 real transactions per second so nobody can sell.

              There's "exchanges" but they need to hold assets to work and they're going to be completely wiped out by a run on Bitcoin, I'll give them half a day at most before they collapse (or "suspend trading"). That's when the real fun begins.

              Popcorn, meet microwave.

    • On the bright side, they're still accepting deposits
  • TerraUSD, Celsius, Babel...

    I don't know if they are the same but they are collapsing in the same manner.

  • Hehehehe, nice! Crash di-crash, di-crash, crash, crash! The weekend will be entertaining.

  • Normal service will never, ever return.

  • Shouldn't this have been forseen? (Score:5, Insightful)

    by ctilsie242 ( 4841247 ) on Friday June 17, 2022 @10:22AM (#62628064)

    One thing I have noticed about recessions. People try to hide the fact that the bottom is dropping out of the economy until the layoffs happen everywhere.

    Shouldn't exchanges have had it in their business continuity plan to foresee a run, or crypto dropping, be it a "correction", or a true "sorry, nobody is coming into the pyramid at the bottom, so the whales in before the reward halvings can cash out" scenario? The fact that people are blocked from exiting is something that is heard around the world, and causes anyone even thinking of investing in cryptocurrencies to at best think twice, at worse, run away from that and not come back, perhaps ensuring that cryptocurrencies will not be a viable investment vehicle in the future, especially once the government regulators close in, watching every single transaction on the Bitcoin blockchain to enforce it. With all the sophisticated tools available, it becomes easy to follow the money, especially because there are only a limited number of places where one can turn a cryptocurrency into a tangible good like a sandwich.

    People invested in cryptocurrencies bash stocks as "just numbers", but a lot of stocks have dividends, and just by sitting on them, I get cash. I also don't have to worry about security. Yes, stocks can crash, but businesses do come back. Cryptocurrencies do nothing for their owner, and the way they are designed, the people who profit from them are the miners (especially those in before reward gets halved). Why would I put value into any cryptocurrency when the people who make money from it are the miners? I'd rather just buy mining equipment, and mine my own, if I did enter the cryptocurrency arena.

    Overall, shouldn't all these exchanges have had this in their plan? A bear market, be it a correction or a major sell-off, if not a collapse would happen sooner or later.

    Wonder if anyone will go to jail over this. I have a feeling 1-2 people may wind up as fall guys, while everyone else walks away.

    • People involved in crypto would call your absolutely reasonable idea FUD.

    • In a word, NO (Score:3, Interesting)

      by gillbates ( 106458 )

      In a word, No.

      The whole justification for crypto is the unspoken, but widely believed, notion that because it's not federally regulated, it can't collapse. Including a contingency plan would scare off investors toward much more soundly managed funds such as mutual funds, bonds, and annuities. The idea is that crypto is for people with more money than common sense, the "greater fools", who are just waiting for someone to separate them from their money in exchange for having the feeling they might very w

    • Shouldn't exchanges have had it in their business continuity plan to foresee a run, or crypto dropping, be it a "correction", or a true "sorry, nobody is coming into the pyramid at the bottom, so the whales in before the reward halvings can cash out" scenario?

      The "You must be new here" meme has never been more applicable.

      The believers wanted to believe and any mention of "tulips" was openly mocked in every single /. crypto thread since the beginning. There were often three or four threads per day.

      "Crypto" is an obvious Ponzi scheme. Math 101 should tell you that nothing can make everybody rich if they just believe. It's a laughable idea.

      Some people made money, sure, but not a single one of them made it by being smart . They just had the dumb luck that there w

      • On the other hand, one could argue that if you're smart enough to make a good estimate of the number of fools out there, you can make money off of anything, including tulips.

        Since we all have eyes and ears and brains to think with, it ought to be an uncontroversial statement that there are plenty of people whose FOMO will get the best of them.

        Just like there are plenty of married men who still think with their dicks. Which is why sexy pictures generate clicks and sales, and why a tulip brokerage is not a ba

        • On the other hand, one could argue that if you're smart enough to make a good estimate of the number of fools out there, you can make money off of anything, including tulips.

          You don't need to be smart for that, just unscrupulous and able to sleep no matter what you did during the day.

          • No. You need to be smart too.

            People who assume they're smarter than the conmen reaching into their pockets make for easy marks.

            I'm so smart, there's no way I'll fall for a pyramid scheme or a pump-and-dump. Now where do I buy my GameSpot stock, and my SomeAssholeOnTheInternetCoins?

    • This kind of thing was foreseen [slashdot.org]. Note that I was offering counsel to avoid the "FOMO" as BTC was climbing past $50k. A lot of us were counseling not to get involved. It was a hard sell during the climb. There are always people who look at fundamentals vs. what the market is doing and stand their ground. We may not "much Lambo" but we'll survive.

      I too have dividend paying stocks, large caps, and they're down. You know what? That's fine with me as long as they can make the dividend payouts. In fact w

    • the economy is still doing gangbusters. What we're seeing are rising prices due to supply chain issues, lock downs in China, and massive market consolidation (3 companies make all the baby formula in the US and one of them shut down... again). We're also seeing all the apartments & houses being bought up by large corporations to rent out for exorbitant fees. None of this is stopping economic growth. We're still growing, still making more stuff (it's just not getting where it needs to because of supply c

  • oops, someone took out one to many stones from the bottom of the pyramid, it's collapsing. This "currency" has no backing, no regulation, nothing to provide faith it is stable, it's not even a form of gambling, it's just a scam, pure and simple.

  • For how long (Score:4, Insightful)

    by enriquevagu ( 1026480 ) on Friday June 17, 2022 @10:59AM (#62628232)

    So it seems that many crypto exchanges do not have real (fiat) money, and they cannot give you the $ corresponding to the current valuation of your crypto coins.

    How long should we expect this "cryptowinter" to last? Well, it will probably last until a) the exchange goes bankrupt and you lose everything (Coinbase explicitly warned [slashdot.org] about this outcome one month ago), or b) the coin valuation drops to a ridiculous value, and they can pay you pennies for your bitcoins.

    Free advice: If you have crypto in another exchange that still allows for withdrawals, you should cash out asap; this will be a cascade effect. Please remember this in a couple of weeks.

    • A crypto *exchange* doesn't need real money. For like a thousand lines of Javascript, I could build an app that lets people exchange things. i.e. I'll facilitate you exchanging a bicycle with your neighbor and you get a portable air conditioner in return.

      What crypto companies seem to be doing is taking "deposits" and then "investing" those "deposits" in absolutely awful ways and losing all the money.

      This is shocking to me as this would seem to be the time that any reasonable investment would be maki

  • This is why bank regulations exist (Score:3)

    by mmdurrant ( 638055 ) on Friday June 17, 2022 @11:14AM (#62628296)
    Banks can't act like they have an infinite supply of money, they have loan ratios and all that. It's why financial regulation is not just good but entirely necessary. Withotu rules, folks are left to rely on their ethos and given the philosophical incoherency that runs rampant in our world, it's insane that anyone trusts that as a backstop.
    • Banks have loan ratios and they also have things like access to the federal reserve discount window if they are solvent but have liquidity issues.

      • people seem to be claiming banks are superior but as we'll be seeing shortly, they are in no better shape than the worst crypto scam companies and just like the crypto scam companies, all your deposits belong to them in reality and they will use them to cover bank debts (bail-ins, look it up), which there are a lot of since big banks are leveraged to the hilt.

        • Re: (Score:2)

          by bws111 ( 1216812 )

          I see you've never heard of the FDIC. It is why banks are in every way superior.

        • I don't know what jurisdiction you are in and what type of insurance depositors have at banks. Here in the US, every depositor is insured by the government up to US$250,000. You will only ever get hit with a bail-in if deposits exceed that amount. However, deposits never exceed that amount except in very rare circumstances. For large depositors there are mechanisms to have their money split across accounts in multiple banks but still receive a single consolidated statement so that it's like one large ac

          • Here in the US, every depositor is insured by the government up to US$250,000.

            No they are not.

            In reality about 1% of bank account holders are covered, because the FDIC does not have enough funds to cover even one large bank collapsing, let alone several.

            So the reality is the rest of the insurance, is the funds you keep in the bank - and those are meant for the real creditors, not people who trusted the bank to hold money for them.

            This is why I have all my money (that I keep in banks) in smaller credit unio

            • JP Morgan Chase has about 2 Trillion in deposits. You are correct that the FDIC doesn't have that much money. But the US government does and given that the FDIC is backed by the full faith and credit of the US government, this is somewhat of an academic distinction.

              More importantly, though, JPMC is not going to go from 2 Trillion in assets to zero. If the bank were to become insolvent some action would be taken before the whole two trillion were gone. Either a liquidation (which would recover most dep

              • But the US government does

                Oh really [usdebtclock.org]

                You can totally ignore the fact that bank bail-ins are real and have been done before, or you can pretend and hope the government can come to your rescue in the event of large scale bank collapses, in a world where the 10 year yield has started to whipsaw and Japan is desperately selling U.S. bonds to save their own currency...

                Like I said, I am out of larger banks. You can risk it if you like, but I can't see why. If I am wrong, all that has happened is I've been using

  • A few more of these and it'll become clear, that people, businesses, and governments won't trust any crypto for investment. Bitcoin has lost nearly 60% in the past six months, it'll be next to fail completely.

    Welcome to the great depression II now with crypto.

    • Re: (Score:2)

      by splutty ( 43475 )

      "Crypto" isn't an investment.

      No one should trust unregulated "Crypto" to begin with, that's kind of in the definition of 'unregulated'.

      "Crypto" is far too small to cause a great depression.

      The (2006?) great depression was caused by/cause a loss of around 10 trillion due to a variety of factors. The sum total of *all* "Crypto" at this moment is 1 trillion. So if literally each and every "Crypto" disappears completely, the asset loss would be 10% of the Great Depression. So.. No.

      • Most of that 1 trillion is held by "whales" who won't be hurt at all, apart from their egos.

        They'll probably throw away huge amounts of money this weekend to try and keep the price afloat.

      • "Crypto" isn't an investment.

        I was short-handing for cryptocurrency which Forbes states [forbes.com] is an investment.

        "Crypto" is far too small to cause a great depression.

        I wasn't implying that either, but people lost money and investments when the market crashed, there was a run on the banks which many became insolvent. Hence, it's rumored that people jumped out of windows on Wall Street. You can easily draw a line from that analogy to what the TFA is stating, there's people who want their fiat currency out of this Babel Finance; it's probably gone [youtube.com] and they shouldn't have invested in it to begin wit

    • Sure but that doesn't explain why companies taking BTC "deposits" can't honor redemptions. If you deposit 100 BTC and then want to withdraw 100 BTC, the fact that the BTC/USD trading ration changed doesn't affect the institution that needs to honor redemptions. They've done something seemingly fraudulent that they don't have assets for honoring redemptions.

      • They've done something seemingly fraudulent that they don't have assets for honoring redemptions.

        Did you think they were just going to keep your coins in a box then give them back when you ask for them?

        I don't know if they did anything fraudulent but they almost certainly did something stupid with them in the belief that there would never be a run on the exchange.

        • I have never owned even a penny of crypto. I would not expect the deposits to be "just kept in a box" but I would expect them not to do something stupid or fraudulent with the deposits.

      • Re: (Score:2)

        by sjames ( 1099 )

        That's because the bold print on the marketing brochure says "We're a bank!" while the sub-microscopic fine print on page 647 of the agreement says "We are DEFINITELY not a bank".

        Don't worry, the big guys at the top will be just fine. There's still enough residual value that they can cash out and come away with a bit of a profit. The rest of the pyramid including small middle class investors get to pound sand.

        Of course the people at the top will say the Fed shouldn't have tightened credit. After all, they w

      • Oh sure, I agree. There's some funny business afoot but again unregulated finance is like trusting your wallet and it's contents to that $50 hooker you just met. Even with regulation investment firms offering services have lots and lots of "YMMV" terminology saying "you could lose all your investment." So, choose your poison or keep it under a mattress.

        • Yes but it is *very* rare that regular investment *firms* limit redemptions. Some mutual funds have done so such as during the US subprime mortgage debacle. But that was time-limited and for a very specific reason that they couldn't actually value the fund since it turns out the holdings were not properly valued. I've never heard of a brokerage house that won't honor a stop limit or withdraw.

  • Crypto is dead, we get it. The real question remains: How does this affect GPU availability?

  • If you are in crypto, or large banks, get out.

    The edge crypto space is collapsing, soon followed by the larger exchanges, then after that start coming the large banks you thought could never have issues.

    There really is not that much difference these days between any of those companies as they are all large and highly leveraged, and all can use anything you have with them as collateral to cover their debts.

  • In this case the departure is hilariously deserved. I would like to see the fraudsters get away clean because fools deserve to suffer for their deliberate adult choices and make a droll example to others.

  • If it walks like a duck, quacks like a duck, it's a fucking duck (or pyramid scheme).

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