This week we revealed to the average investor how there are interconnected cryptocurrency companies. Two companies have frozen their withdrawal and crypto hedge funds are in trouble. The Celsius Network, Babel Finance and Three Arrows Capital are confused and it is not yet clear how serious the damage will be.
This week began with a Sunday night announcement from the giant crypto lending company Celsius Network. Pausing withdrawals and remittances..After that, the value of Bitcoin and other cryptocurrencies is already A few weeks on the slide Some call it “crypto winter,” and it plummeted further, and five days later, the news hasn’t improved much.
All three companies managed the money of others. The Celsius network has attracted individual investors. Babel Finance, According to CNBC, there are 500 clientsRaised $ 80 million in a funding round a month ago. Investing in a cryptocurrency startup, 3AC managed $ 10 billion in assets in March. according to luck.. Spillover from corporate predicament can affect the broader crypto ecosystem.
First published in Celsius, one statement a week after the freeze. A FAQ that does not tell you when an investor can access your funds. CEO Alex Mashinsky tweeted that the team worked “non-stop” and thanked the patience and support of the unnamed people without commenting on reports that the company hired a restructuring lawyer.
As of May, the company had $ 12 billion in assets under management. Mashinsky has assembled Celsius as a decentralized / centralized hybrid financing approach that may be comparable to securities lending.However, Celsius lost millions due to the mistake of confiscating reparations. After Badger DAO hack Last summer, Ethereum’s staking service, Stakehound, seemed to misplace the private key, resulting in an additional 35,000 ETH when the token became worthless. Report CoinDesk.. It did not inform the customer of the loss. CoinDesk We compared the collapse of Celsius with the collapse of Lehman Brothers in 2008.
A study by blockchain analytics firm Nansen showed a change in strategy that relies on the DeFi protocol to achieve higher yields. CoinDesk OK. Machineski claimed that Celsius wasn’t exposed to the collapse of USTerra, but the report points out other data linking it to Staked ether (stETH) and sells its stake to pay investors. It can cause problems if you have to.
Meanwhile, in Hong Kong, another crypto lender named Babel Finance has announced its own freeze on withdrawals and redemptions, claiming it is “faced with extraordinary liquidity pressure.” Just recently May 25th, Closed round of funding Valuing the company for $ 2 billion. Report by Decryption Collect allegations that Babel abused the client’s funds. Genesis Capital, Bitgo, Blockchain.com, and Bitcoin.com are one of its well-known clients.
Finally, the cryptocurrency hedge fund Three Arrows Capital (3AC) The Wall Street Journal It suffered a great loss. (3AC has invested about $ 200 million Failed Luna protocol — Investment that later went to zero Luna and her stablecoin terra crashed last month. ) The founders of 3AC state that they are currently working with legal and financial advisors. The company may sell its assets, but it may be bailed out by another company.
3AC “ghosted everyone” in response to margin calls. Danny Yuan said, Head of transaction for 8Blocks Capital on Twitter. As a result, other companies were forced to sell their assets, and the price of cryptocurrencies became even lower.
3AC closed its position on the Bitfinex exchange, but FTX, Deribit, and BitMEX liquidated the position because the company was unable to handle the margin call. According to the report by block.. FinBlox, crypto staking company, Withdrawals are restricted Up to $ 1,500 per month while investigating damage from 3AC. Finblox invested $ 3.6 million in 3AC in December. CoinDesk Report.
As 3AC shows, a big loss on one big investment can cause huge spillover effects and it can take time to see what they are. Luna collapsed a month ago and the extent of the damage to 3AC was unclear until this week. Given the connections between 3AC, Celsius Network, Babel Finance, and other markets, cryptocurrencies do not seem to be bleeding.
