Babel Finance Halts Withdrawals - Revision history

Azoundria: Another 30 minutes complete.

2023-06-09T18:42:17Z

Another 30 minutes complete.

← Older revision		Revision as of 12:42, 9 June 2023
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	{{Case Study Under Construction}}[[File:Babelfinance.jpg\|thumb\|Babel Finance]]Babel Finance is a global investment firm for high net worth individuals. In June 2022, they stopped allowing withdrawals of assets on their platform. No further notice has been available on the website since July 2nd, and no updates have been available on Twitter since June 20th. It is unclear if any assets will be recovered at any point in the future.		{{Case Study Under Construction}}[[File:Babelfinance.jpg\|thumb\|Babel Finance]]Babel Finance is a global investment firm based in Hong Kong for high net worth individuals. Investors would provide digital assets to the platform, which could then be invested on their behalf. In June 2022, they stopped allowing withdrawals of assets on their platform. No further notice has been available on the website since July 2nd, and no updates have been available on Twitter since June 20th. It is unclear if any assets will be recovered at any point in the future.

	== About Babel Finance ==		== About Babel Finance ==
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	\|June 16th, 2022 4:17:00 AM MDT		\|June 16th, 2022 4:17:00 AM MDT
	\|Last Tweet Prior To Event		\|Last Tweet Prior To Event
	\|Babel Finance's last Tweet is unrelated to the situation<ref>[https://twitter.com/BabelFinance/status/1537378747753431040 Babel Finance - "Comparative Analysis of the Stock Market and Bitcoin Reactions to Fed’s Policy" - Twitter] (Apr 11, 2023)</ref>.		\|Babel Finance's last Tweet is unrelated to the situation<ref name=":1">[https://twitter.com/BabelFinance/status/1537378747753431040 Babel Finance - "Comparative Analysis of the Stock Market and Bitcoin Reactions to Fed’s Policy" - Twitter] (Apr 11, 2023)</ref>.
	\|-		\|-
	\|June 17th, 2022 4:50:14 AM MDT		\|June 17th, 2022 4:50:14 AM MDT
	\|Babel Finance Announces Withdrawal Suspension		\|Babel Finance Announces Withdrawal Suspension
	\|The first capture of the announcement on the Babel Finance website<ref name="babelfinance-9299" /><ref>[https://web.archive.org/web/20220617105014/https://babel.finance/article-views.html?id=50 "During this period, redemptions and withdrawals from Babel Finance products will be temporarily suspended" - Babel Views Archive] (Apr 11, 2023)</ref>.		\|The first capture of the announcement on the Babel Finance website<ref name="babelfinance-9299" /><ref name=":2">[https://web.archive.org/web/20220617105014/https://babel.finance/article-views.html?id=50 "During this period, redemptions and withdrawals from Babel Finance products will be temporarily suspended" - Babel Views Archive] (Apr 11, 2023)</ref>.
	\|-		\|-
	\|June 17th, 2022 5:13:17 AM MDT		\|June 17th, 2022 5:13:17 AM MDT
	\|CoinDesk Article Published		\|CoinDesk Article Published
	\|CoinDesk publishes an article on ~~the~~ Babel Finance ~~situation~~<ref name="coindesk-9307" />. ~~TBD more detail~~.		\|CoinDesk publishes an article on Babel Finance suspending withdrawals<ref name="coindesk-9307" />. The article includes information from the official announcement and past funding of Babel Finance. “Babel Finance is taking action to best protect the interests of our clients," a company spokesperson told CoinDesk. "We are in close communication with all related parties and will share updates in a timely manner."
	\|-		\|-
	\|June 17th, 2022 7:39:00 AM MDT		\|June 17th, 2022 7:39:00 AM MDT
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	\|FX Street Article Shares Hope		\|FX Street Article Shares Hope
	\|A FX Street article covers over the Babel Finance "Hope", a stable token which uses Bitcoin and Ether as collateral, maintaining a value close to the dollar through arbitrage incentives. The plan is to use this stablecoin to restructure the $766m debt which Babel owes to creditors<ref name="unnamed-10706" />.		\|A FX Street article covers over the Babel Finance "Hope", a stable token which uses Bitcoin and Ether as collateral, maintaining a value close to the dollar through arbitrage incentives. The plan is to use this stablecoin to restructure the $766m debt which Babel owes to creditors<ref name="unnamed-10706" />.
			\|-
			\|March 6th, 2023 8:39:00 AM MST
			\|Moratorium Application Files
			\|Babel Finance publishes a press release including a moratorium application in Singapore high court<ref name=":2" />. "In light of the foregoing developments, Babel Finance has filed applications in the General Division of the High Court of the Republic of Singapore for moratorium protection under section 64 of the Insolvency, Restructuring and Dissolution Act" "In anticipation of the proposed Scheme, Babel Finance has engaged FTI Consulting to carry out an independent evaluation of aspects of the Restructuring Plan. Babel Finance also intends to nominate partners from an international accounting firm to act as the proposed scheme administrator or manager for the proposed Scheme."
			\|-
			\|March 6th, 2023 5:29:00 AM MST
			\|CoinDesk Article on Hope Stablecoin
			\|CoinDesk publishes an article about the proposal to role out a DeFi platform to begin paying back creditors<ref name=":1" />. "Babel has filed a moratorium extension that would prevent creditors from making claims for at least another six months, according to a press release. The filing, according to Bloomberg, alleges that co-founder Wang Li racked up $524 million in proprietary trading losses, with another $224 million being lost after lenders liquidated collateral that underpinned loans issued to Babel."
	\|}		\|}

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	We will not comment on speculations on the market. But as we have indicated previously, Babel Finance continues to communicate closely with customers, counterparties and other stakeholders, and will provide updates in a timely and transparent manner as we pursue a comprehensive solution to the current liquidity issues. We appreciate our customers' understanding and patience at this time.</blockquote>		We will not comment on speculations on the market. But as we have indicated previously, Babel Finance continues to communicate closely with customers, counterparties and other stakeholders, and will provide updates in a timely and transparent manner as we pursue a comprehensive solution to the current liquidity issues. We appreciate our customers' understanding and patience at this time.</blockquote>



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	== Ongoing Developments ==		== Ongoing Developments ==
	What parts of this case are still remaining to be concluded?		What parts of this case are still remaining to be concluded?
	~~== General Prevention Policies ==~~
	Babel Finance provides limited public transparency and visibility into where funds have been invested. It is thus unclear what assets back the fund, and it appears they have made unkeepable promises to investors. A better system would see periodic third party reviews to ensure firms will always be able to meet their obligations.
	== Individual Prevention Policies ==		== Individual Prevention Policies ==
	{{Prevention:~~Individuals~~:~~Placeholder~~}}		Babel Finance provides limited public transparency and visibility into where funds have been invested.

			{{Prevention:Individual:Avoid Third Party Custodians}}

			{{Prevention:Individual:Store Funds Offline}}

	When using a third party platform (such as for trading), it is important to verify that the platform has a full backing of all assets. This can be accomplished through a proper Proof of Reserves protocol, review of an audit that includes the level of reserves (if such exists), or ... If this can't be validated, then users should avoid using that platform.		{{Prevention:Individual:Question Unrealistic Profit}}

	{{Prevention:Individuals:End}}		{{Prevention:Individuals:End}}

	== Platform Prevention Policies ==		== Platform Prevention Policies ==
	{{Prevention:Platforms:~~Placeholder~~}}		{{Prevention:Platforms:No Secret High Risk Investments}}

			{{Prevention:Platforms:Implement Multi-Signature}}

			{{Prevention:Platforms:Regular Audit Procedures}}

	{{Prevention:Platforms:End}}		{{Prevention:Platforms:End}}

	== Regulatory Prevention Policies ==		== Regulatory Prevention Policies ==
	{{Prevention:Regulators:~~Placeholder~~}}		{{Prevention:Regulators:Platform Security Assessments}}

			{{Prevention:Regulators:Establish Industry Insurance Fund}}

	{{Prevention:Regulators:End}}		{{Prevention:Regulators:End}}

Azoundria: Another 30 minutes complete.

2023-06-07T21:10:45Z

Another 30 minutes complete.

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Azoundria: Down to 10 sources left to review, further expanding the article.

2023-04-11T19:30:37Z

Down to 10 sources left to review, further expanding the article.

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Azoundria at 21:24, 10 April 2023

2023-04-10T21:24:08Z

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Azoundria: Created page with "{{Imported Case Study|source=https://www.quadrigainitiative.com/casestudy/babelfinancehaltswithdrawals.php}} Babel FinanceBabel Finance is a global investment firm for high net worth individuals. In June 2022, they stopped allowing withdrawals of assets on their platform. No further notice has been available on the website since July 2nd, and no updates have been available on Twitter since June 20th. It is unclear if any assets will be re..."

2023-01-29T03:42:38Z

Created page with "{{Imported Case Study|source=https://www.quadrigainitiative.com/casestudy/babelfinancehaltswithdrawals.php}} thumb|Babel FinanceBabel Finance is a global investment firm for high net worth individuals. In June 2022, they stopped allowing withdrawals of assets on their platform. No further notice has been available on the website since July 2nd, and no updates have been available on Twitter since June 20th. It is unclear if any assets will be re..."

New page

{{Imported Case Study|source=https://www.quadrigainitiative.com/casestudy/babelfinancehaltswithdrawals.php}}

[[File:Babelfinance.jpg|thumb|Babel Finance]]Babel Finance is a global investment firm for high net worth individuals. In June 2022, they stopped allowing withdrawals of assets on their platform. No further notice has been available on the website since July 2nd, and no updates have been available on Twitter since June 20th. It is unclear if any assets will be recovered at any point in the future.

This is a global/international case not involving a specific country.

== About Babel Finance ==
"Founded in 2018, Babel Finance started out by providing BTC-backed crypto lending services. Since then, we have grown to become one of the world's largest wholesale crypto financial services providers. By the end of 2021, we had accumulated more than 3 billion USD in loan balances. Based in Hong Kong and Singapore, we assisted global institutional investors and high net worth individuals in developing integrated solutions covering technology, products, and strategies around crypto lending and crypto asset management services."

"Aiming to be the most prestigious institution in crypto finance, we're committed to offering our clients full crypto financial services. By offering an easy, smooth and secure experience, we're building a solid crypto financial infrastructure for the world."

"Our business covers Bitcoin, Ethereum, mainstream stablecoins, and major altcoins in which we deliver a high quality service to more than 600 institutional and high net worth individual clients. Currently, Babel Finance has an average monthly crypto derivative trading volume of over 8 billion USD. Over the years, we have gained the trust of global investors such as Sequoia China Capital, BAI Capital, Zoo Capital, Tiger Global Management, Dragonfly Capital, as well as NGC Ventures. As cryptocurrency is quickly being adopted by mainstream audience across the globe, the importance of bracing for compliance and regulation is paramount."

"At Babel Finance, we are actively applying for licenses and working to enhance our compliance in Asia, Europe, and North America. This will ensure the security of our business as pioneers of the developing crypto industry. Backed by a well-funded network of global partners, Babel Finance is a reliable and strong bridge between Europe, North America, and Asia Pacific's crypto market. Led by our professional trading team we are dedicated to providing stable yields for our clients. Babel Finance looks forward to working with you to build a new crypto finance world."

"Babel, which has 500 clients and limits itself to bitcoin, ethereum and stablecoins, raised $80 million in a funding round last month, valuing it at $2 billion. It had ended last year with $3 billion of loan balances on its balance sheet."

"Crypto lenders gather crypto deposits from retail customers and re-invest them, proclaiming double-digit returns and attracting tens of billions of dollars in assets."

"Hong Kong-based Babel Finance temporarily suspended the withdrawals and redemption of crypto assets on Friday, as the crypto lender scrambles to pay its clients after the recent slump in the digital currency market." "[C]rypto lender Babel Finance froze users’ assets and is currently considering restructuring options."

"Recently, the crypto market has seen major fluctuations, and some institutions in the industry have experienced conductive risk events. Due to the current situation, Babel Finance is facing unusual liquidity pressures. We are in close communication with all related parties on the actions we are taking in order to best protect our customers. During this period, redemptions and withdrawals from Babel Finance products will be temporarily suspended, and resumption of normal service be notified separately. We apologize sincerely for any inconvenience caused."

“Recently, the crypto market has seen major fluctuations, and some institutions in the industry have experienced conductive risk events. Due to the current situation, Babel Finance is facing unusual liquidity pressures,” the company said.

"Babel Finance management has taken the following steps to alleviate the company's liquidity situation:"

"1. We have carried out an emergency assessment of the company's business operations to understand the company's liquidity status."

"2. We have communicated with major counterparties and relevant customers, and reached preliminary agreements on the repayment period of some debts, which has eased the company's short-term liquidity pressure."

"Babel Finance disputes that it is in default on its loan from Orthogonal Trading out of the Orthogonal USDC Pool, and has communicated this position to Orthogonal’s representatives." "Babel Finance has engaged in, and will continue to maintain, constructive dialogue with representatives of Orthogonal Trading about the steps being taken by Babel Finance to address its liquidity position, as part of the comprehensive steps taken to respond to the current dynamics in the crypto market."

"3. We have actively communicated with shareholders and potential investors, and will continue to communicate and obtain liquidity support."

"Babel Finance will be consulting with its various advisors as to whether or not the disputed actions taken by Orthogonal Trading may give rise to a cause of action by Babel Finance against Orthogonal. However, constructive mutually beneficial dialogue remains Babel Finance’s preferred path for addressing Orthogonal’s concerns about Babel’s plans for addressing the current liquidity position."

"Given the current context of severe market volatility, Babel Finance’s management will continue to communicate closely with customers, counterparties, and other partners, and provide updates in a timely and transparent manner."

"Babel Finance will actively fulfill its legal responsibilities to customers and strive to avoid further transmission and diffusion of liquidity risks. We thank our customers for their understanding and support during this period, and hope to obtain further support from our partners."

"At around 9:00AM Hong Kong time [on June 22nd, 2022], Babel Finance's official Twitter @babelfinance experienced an unknown attack, causing the account to be abnormally suspended. We are actively contacting Twitter to restore the account. Meanwhile, we discovered the following fake accounts on Twitter: @BabelFinance_, @BabelFinance__. We remind our customers and partners to be vigilant to avoid fraud and deception."

"Reportedly, the crypto firm refuted the rumor that it had told its partners that it was insolvent. In terms of the speculation regarding its liquidity crisis, the firm clarified that it had no business with the crypto hedge fund Three Arrow Capital, which, as CryptoPotato reported earlier, sought bailouts through “asset sale and a rescue by another firm.”"

"The troubled crypto lender is in conversations with large institutions for solutions, including “setting up a new entity to take up some of the debts.”"

“Babel Finance is taking action to best protect the interests of our clients," a company spokesperson told CoinDesk. "We are in close communication with all related parties and will share updates in a timely manner."

"Though the company noted that it would “provide updates in a timely and transparent manner,” it did not release details regarding when the platform will let users withdraw their funds."

This is a global/international case not involving a specific country.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

* Known history of when and how the service was started.
* What problems does the company or service claim to solve?
* What marketing materials were used by the firm or business?
* Audits performed, and excerpts that may have been included.
* Business registration documents shown (fake or legitimate).
* How were people recruited to participate?
* Public warnings and announcements prior to the event.

Don't Include:
* Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
* Anything that wasn't reasonably knowable at the time of the event.
There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.

== The Reality ==
This sections is included if a case involved deception or information that was unknown at the time. Examples include:

* When the service was actually started (if different than the "official story").
* Who actually ran a service and their own personal history.
* How the service was structured behind the scenes. (For example, there was no "trading bot".)
* Details of what audits reported and how vulnerabilities were missed during auditing.

== What Happened ==
The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.
{| class="wikitable"
|+Key Event Timeline - Babel Finance Halts Withdrawals
!Date
!Event
!Description
|-
|June 17th, 2022 12:00:00 AM
|Main Event
|Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.
|-
|
|
|
|}

== Total Amount Lost ==
The total amount lost is unknown.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

== Immediate Reactions ==
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

== Ultimate Outcome ==
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

== Total Amount Recovered ==
There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

== Ongoing Developments ==
What parts of this case are still remaining to be concluded?

== Prevention Policies ==
Babel Finance provides limited public transparency and visibility into where funds have been invested. It is thus unclear what assets back the fund, and it appears they have made unkeepable promises to investors. A better system would see periodic third party reviews to ensure firms will always be able to meet their obligations.

== References ==
[https://ca.proactiveinvestors.com/companies/news/986546/celsius-user-funds-remain-in-the-balance-as-partial-debt-repaid-986546.html https://ca.proactiveinvestors.com/companies/news/986546/celsius-user-funds-remain-in-the-balance-as-partial-debt-repaid-986546.html] (Jul 12)

[https://www.cnbc.com/2022/06/17/babel-finance-suspends-withdrawals-as-crypto-markets-slump.html https://www.cnbc.com/2022/06/17/babel-finance-suspends-withdrawals-as-crypto-markets-slump.html] (Oct 19)

[https://babel.finance/article-views.html?id=50 Babel Views] (Oct 19)

[https://babel.finance/about-us.html About Babel Finance-Crypto Financial Services] (Oct 19)

[https://babel.finance/article-views.html?id=52 Babel Views] (Oct 20)

[https://twitter.com/emilyjnicolle/status/1538879549735424000 @emilyjnicolle Twitter] (Oct 20)

[https://babel.finance/article-views.html?id=51 Babel Views] (Oct 20)

[https://babel.finance/article-views.html?id=54 Babel Views] (Oct 20)

[https://www.reuters.com/markets/wealth/crypto-lender-babel-finance-valued-2-billion-after-latest-fundraising-2022-05-25/ Crypto lender Babel Finance valued at $2 billion after latest fundraising | Reuters] (Oct 20)

[https://cryptopotato.com/babel-finance-set-to-delay-debt-payments-refutes-invovlement-with-3ac/ Babel Finance Set to Delay Debt Payments, Refutes Invovlement With 3AC] (Oct 20)

[https://www.coindesk.com/business/2022/06/17/babel-finance-suspends-withdrawals-citing-unusual-liquidity-pressures/ Babel Finance Suspends Withdrawals, Citing 'Unusual Liquidity Pressures'] (Oct 20)

[https://cryptobriefing.com/babel-finance-halts-withdrawals-citing-low-liquidity/ Babel Finance Halts Withdrawals, Citing Low Liquidity - Crypto Briefing] (Oct 20)

[https://babel.finance/ Babel Finance - We have your best interest in mind] (Oct 20)

[https://twitter.com/Yogita_Khatri5/status/1538854746697928705 @Yogita_Khatri5 Twitter] (Oct 20)

[https://tekiosmag.com/2021/06/10/babel-finance-capta-us40-millones-en-ronda-serie-a-para-su-negocio-de-prestamos-criptograficos/ Babel Finance capta US$40 millones en ronda Serie A para su negocio de préstamos criptográficos | TEKIOS] (Oct 20)

[https://coinquora.com/crypto-lender-babel-finance-gains-40m-from-investors/ https://coinquora.com/crypto-lender-babel-finance-gains-40m-from-investors/] (Oct 20)

[https://wublock.substack.com/p/investigation-how-2billion-lending https://wublock.substack.com/p/investigation-how-2billion-lending] (Oct 25)

[https://cryptocomdefi.substack.com/p/weekly-defi-update-2022-week24 Crypto.com Weekly DeFi Update (Week 24, 13/06/2022 – 19/06/2022)] (Dec 1)