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Crypto lending company Babel Finance halts redemptions and withdrawals
- kosyblysk666 4y ago
- deleted 4y ago[deleted]
- api 4y agoWait until Tether goes... wait until Tether goes...
- mousetree 4y agoI found it amusing that this notice says "Due to the current situation, Babel Finance is facing unusual liquidity pressures" and their homepage says "Seeking Certainty in Uncertainty".
- deleted 4y ago[deleted]
- Jorge1o1 4y agoNaming your company after a failed experiment is also an ironic choice. What’s next… Icarus Investments?
- curiouscats 4y agohttps://www.icarusinvestmentgroup.com/ https://www.icarusinvestmentgroup.com/ :-)
- benreesman 4y agoWell I’ve lost track of how many hedge funds Thiel has run into the ground, but I think the first was “Mithril”, which didn’t work out great for the dwarves.
- h2odragon 4y ago> Icarus Investments High efficiency, high energy solar solutions using phase change in solid hydrocarbons for energy capture.
- MauranKilom 4y agoUntil I learned about the mechanics of it, I thought it would be a glorious idea to have e.g. metal rods placed in the Sahara that would contract at night and expand at day (due to the high temperature differences) and extract energy from the movement. Counter to young me's expectations, thermal expansion is not some infinite force, and if you run the real physics, the low frequency makes it not worth the material investment (power produced scales linearly with the volume of metal). Not to mention that the Sahara is not exactly the juiciest market for selling power. A similar idea with phase changing wax (iirc that's more or less how the temperature regulator in your shower works) is probably just as physically sound and just as economically doomed.
- h2odragon 4y agoJust because an idea is unsound, impractical, and useless is no reason not to fund raise on it. See also SpinLaunch and quantum computing companies. And the wax thing can work, you just need wax that's energetic enough to count as an explosive. I haven't worked out the recovery phase yet, granted; but with a few billion dollars I'm sure it can be made to work.
- highwaylights 4y agoSharkbait holdings
- TheOtherHobbes 4y agoPerhaps inevitably: https://www.icarusinvestmentgroup.com/ https://www.icarusinvestmentgroup.com/
- kwertyoowiyop 4y agoFoolMeOnce Holdings?
- aaaaaaaaaaab 4y agoThe music is about to stop!
- rootsudo 4y agoNo, it already did - we're seeing the effects of it now though. The speed it cascades thru though is second.
- ryanSrich 4y agoJust like it has for every previous crypto bull market. The casinos will be back in another 3 years.
- highwaylights 4y agoExactly, there's a whole generation of people too young to get ripped off yet that will be around in 3 years to throw their student loans in the toilet.
- whywhywhywhy 4y ago> to throw their student loans in the toilet If it's a student loan its already in the toilet.
- VHRanger 4y agoDon't think so. The casino existed for its entire lifetime in a bull run. No one knows how they'll survive a recession
- ryanSrich 4y agoWe’re likely in a recession by next quarter. On average, recessions last about 12 months. We won’t be in a recession by the time the next bull run starts.
- aaaaaaaaaaab 4y agoHopefully enough normies lose their life savings that they’ll demand government regulation.
- gbronner 4y agoEvery generation rediscovers the financial frauds of the past
- highwaylights 4y agorediscovers? BuT tHiS Is aLl A nEw PaRaDiGm!
- ham-sandwich 4y ago
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- k__ 4y agoMaybe a good thing that companies in that space are going down. Clears the way for more decentralization.
- deleted 4y ago[deleted]
- throwingrocks 4y agoThis is sarcasm, right?
- swarnie 4y agoIts hard to tell with this particular cult.
- prtkgpt 4y ago
- redox99 4y agoWhy sarcasm? Centralized crypto "banking" institutions are the worst of both worlds. You are giving away your money to someone else, and there are no regulations to protect you from being screwed over by them. With DeFi (decentralized finance) you have transparency over what the smart contract does. (Of course you have to be careful because a lot of things claim to be decentralized but are actually centralized)
- ceejayoz 4y ago> With DeFi (decentralized finance) you have transparency over what the smart contract does. No, you don't. People find subtle bugs in open source code all the time, some of them disastrous. Unintentional bugs in smart contracts have lost tens of millions of dollars multiple times; imagine what you could accomplish with intentional holes. Parity lost $280M alone. https://www.cnbc.com/2017/11/08/accidental-bug-may-have-frozen-280-worth-of-ether-on-parity-wallet.html https://www.cnbc.com/2017/11/08/accidental-bug-may-have-froz...
- HarryHirsch 4y agoThat's what you get in a zero-interest rate environment with no industrial policy. Building physical infrastructure would cost real-world money and cut into profits, hence what you end up with is virtual casinos. No one is better off with that. At least in the runup to 2008 there was housing built speculatively, but since then there has been no productive investment at all.
- deleted 4y ago[deleted]
- deleted 4y ago[deleted]
- mschuster91 4y ago> That's what you get in a zero-interest rate environment with no industrial policy. There was a complete lack of any kind of policy in almost all major Western countries. Since the competitive pressure of the USSR fell away, Western politics have stagnated - keep the economy as-is, maybe lower corporate taxes and privatize government services. The only thing where a bit of progress happened in politics were social equality issues (gay marriage, access to abortions) and that's it. But no government really thought about what digitalization would bring, how to regulate it to prevent the rise of new exploitation models (gig workers) or speculative bubbles (dotcom bubble, the current shitcoin collapse), or how the economy should transform to the new possibilities and realities. The result is - we've seen it all - not pretty... the economy clearly wants directions from politics where it should go (particularly in the automotive industry), and a ton of money was blasted into cryptocurrencies, NFTs and other scams simply because there was no direction where money should go instead. If one wants to boil it down, I'd call it "this is what happens when the free market takes ultimate control over everything".
- ClumsyPilot 4y ago> There was a complete lack of any kind of policy in almost all major Western countries. Since planned economy doesnt work, then clearly we shouldnt do planning of any kind at all
- rvz 4y agoNot all of these crypto projects will survive. When the tide lowers, we will be seeing who is swimming naked and it looks like these DeFi projects have been caught after the hype has died with the market sentiment turning bearish for crypto in general. The ones that will survive this crypto crash are probably going to be around for much longer, especially most cryptocurrency coins and blockchains (and not the ERC-20 tokens)
- highwaylights 4y agoStill Ponzi schemes, but yes they probably will continue unabated.
- rvz 4y agoSo companies like Checkout.com, Stripe, etc using a cryptocurrency in their crypto product means that they are also part of the so called 'Ponzi scheme' and they are currently out there scamming?
- a2tech 4y agoYes. Or at least they're exploiting the situation.
- highwaylights 4y agoThis right here. They want that sweet Ponzi-adjacent money. All the receipts, none of the liability*. (*they hope).
- rvz 4y agooH nO. SoMEoNE pLEaSe SToP tHeM /s That means Stripe, Checkout.com, etc are somehow now 'scammers' and by using crypto, they have found a legitimate use case for it. If they are scamming, Where is the scam? So now people using Stripe's products and using their crypto offering are now facilitating in the so called 'scam'. Does that mean they should close down their Stripe or Checkout.com accounts to stop the so-called scam that Stripe and Checkout.com are involved in?
- Gatsky 4y agoInteresting choice of name, presumably they were familiar with how the Tower of Babel played out.
- kwertyoowiyop 4y agoThe name was too subtle. They needed to add a giant “/s” after it.
- deleted 4y ago[deleted]
- kwertyoowiyop 4y agoThey have a couple open “Risk Control Manager” positions. Probably high-priority hires. https://babel.finance/join-detail.html?id=9 https://babel.finance/join-detail.html?id=9
- deleted 4y ago[deleted]
- fakedang 4y agoRemember when crypto was supposed to be the "holy grail" against the current economic situation? Edit:- the cycle of upvotes and down votes on this comment hahaha....
- yessirwhatever 4y agoThe concept is sound, implementation is what matters. Blockchain and crypto got hijacked is all.
- Loughla 4y agoIf something only and exclusively works in theory, it doesn't work.
- highwaylights 4y agoNo, they didn't. This was always inevitable, based on it's inherent properties.
- randomsearch 4y agoSame as communism.
- yessirwhatever 4y agoNot true. Communism is inherently inhumane.
- randomsearch 4y agoPoe's law
- yessirwhatever 4y agoSorry, I don't speak nihilism.
- ditn 4y ago
- icu 4y agoMy biggest takeaway right now is to study the crypto firms and projects that are having trouble as a way to abstract what red flags to look for. For example, with Terra the abstraction was that pegs don't work as we've seen many a time, especially when Soros broke the BoE. I took a small bath with my Terra holding and life goes on. I can do that because I didn't use leverage, I can lose everything I put into crypto, and I diversified my crypto portfolio. Moving forward I'm staying away from projects with a "stable coin" component as I don't think the fundamentals work. If anyone has come across an analysis framework for other crypto projects please let me know.
- shafyy 4y agoI do have a great analysis framework for crypto projects: "is crypto project?" -> "stay away"
- icu 4y agoSure I get that, but I'm old enough to remember the .com crash carnage and people saying that the web was a total waste of time etc and look how wrong they were. I think that the future is a probability distribution, and there is a non-zero probability that crypto doesn't die but keeps growing. Therefore, I'm not all in, but I'm not all out.
- Tesl 4y agoI was there too and basically nobody said that. Crypto being "like the early internet" and "people said that the web was a waste of time too!" are the biggest crypto lies ever told and repeated. Absolute whoppers.
- icu 4y agoI exaggerate, but in the run up neighbours were telling everyone to just buy Microsoft, and everyone tech adjacent I knew was trying to make an e-commerce website. I was just graduating out of university and web dev jobs evaporated. Many e-commerce companies went bust, or were acquired (my gf at the time experienced layoff after layoff until she went). At that time everyone I knew was not thinking about doing anything web related. Probably the smart money knew that the builders who kept going had a chance to run up when the market came back on the excitement of what they built, but my social circle were not privy to those conversations.
- ceejayoz 4y agoTwo years ago: https://decrypt.co/43168/whistleblowers-level-accusations-against-chinas-biggest-crypto-lender-babel-finance https://decrypt.co/43168/whistleblowers-level-accusations-ag... > Anonymous sources who claim to have inside knowledge allege that Babel Finance has been misusing client funds via highly leveraged transactions and without permission. (Oh, look, Tether's involved again. How much of the $160M in their claimed "shareholder capital" at https://tether.to/en/transparency https://tether.to/en/transparency has evaporated in the last month? They're currently claiming it hasn't changed by more than $50 since a month ago; https://twitter.com/jjjbtc/status/1524819806892982272 https://twitter.com/jjjbtc/status/1524819806892982272)
- jcranmer 4y ago> (Oh, look, Tether's involved again. How much of the $160M in their claimed "shareholder capital" at https://tether.to/en/transparency https://tether.to/en/transparency has evaporated in the last month? They're currently claiming it hasn't changed by more than $50 since a month ago; https://twitter.com/jjjbtc/status/1524819806892982272 https://twitter.com/jjjbtc/status/1524819806892982272) If you need any strong suggestions that Tether's asset statements are a pack of lies, this is it. They claimed to have--before the cryptocurrency collapses started--an equity buffer of around 0.2% of total assets. Now they claim to have unwound ~10% of those positions in a market environment where selling any of those assets (even something like US treasuries!) would realize enough loss to wipe out that buffer. Instead, their equity buffer increased by something like 0.00001%.
- Majromax 4y agoSurprisingly (or suspiciously) steady financial results are also a fair marker of an offering being a scam or fraudulent, particularly when there's no explanation beyond "good management practices." Since a pure fraud makes up its books, it's easy to declare a steady path of returns. Reality tends to be more complicated, and delivering steady returns in a turbulent market is both hard and expensive (by way of hedging contracts).
- lifty 4y agoQuestion for the crypto skeptics of HN. Do you think this cycle the whole crypto space goes down the drain never to be heard of again? Do you think the whole space is a fad or do you think there are patches of values underneath the froth? How do you see the space evolving? Thanks!
- ceejayoz 4y agoThere will always be new victims ready to hear "this time is different".
- blitzar 4y agoLet me just see if we can validate this comment ... People bought luna 2.0 within days of the collapse of luna 1.0 - check
- xtracto 4y agoIts wa quite sad actually. I like the blockchain technology and its properties. I like things like hyperledgrler and the like. But at the same time it's disgusting the current state of the crypto wars. All that is happening is due to greed. People are greedy, crypto "companies " are greedy and everyone wants to become rich without effort. There are VERY few projects that really want to develop technology. And those are also hijacked by greedy people to play as casinos. I really wish the crypto space would crash and burn, BTC to hobdown to $100 and similar, so that all that noise goes out, and people go back to scam penny stocks or Amway, and leave the development of blockchain technology alone. I remember when Wikileaks started accepting bitcoin. Satoshi very well mentioned that it was not ready. I am sure he was surprised by the craziness that came of it. Becoming exactly the thing that it was supposed to fight against.
- deleted 4y ago[deleted]
- bikeshed 4y agoDo I think it will? No; there's always another sucker ready to lose their life savings. Do I hope this will be the cycle though? Oh absolutely.
- O__________O 4y agoBesides Terra (LUNA), Celsius Network (CEL), 3AC, and Babel Finance —- are there other examples? * As is, while clearly some of these failures have had a massive impact, there clearly a lot of DeFi projects of significance still standing: https://coinmarketcap.com/view/defi/ https://coinmarketcap.com/view/defi/
- aaaaaaaaata 4y ago
- O__________O 4y agoIt’s amazing to me how fast the number of meaningless comments are growing on HN. Anything of substance to add?
- deleted 4y ago[deleted]
- VHRanger 4y agoBabel was pretty important to other lending institutions. Here are dominos to fall ahead of us: - BlockFi - Voyager Somewhere down the line, tether is also standing. We know they're insolvent, the question is when redemptions become a problem. And at that point, the abyss
- cdiddy2 4y agoMost things collapsing aren't defi, with the exception of Terra which, as an algo stable was expected to fail like all algo stables before it. Celsius/3AC/Babel are all not defi and we would know about their health and risk factors much sooner if they were defi.
- airza 4y agoWhat is celsius if not defi?
- 4y ago
- Barrera 4y agoThis article gives some context, including this: > At the end of 2021, Babel Finance had an outstanding loan balance of over $3 billion, up from $2 billion the previous February. It averaged $800 million in monthly derivatives trading volume and had structured and traded over $20 billion in options products. https://www.coindesk.com/business/2022/06/17/babel-finance-suspends-withdrawals-citing-unusual-liquidity-pressures/ https://www.coindesk.com/business/2022/06/17/babel-finance-s... The ripple effects here are going to be substantial and unpredictable. This was a toy bank/hedge fund that grew to monstrous proportions. Now that bank is experiencing a run and it has done what every bank before it facing a similar problem has done: blocked withdrawals. Please explain to me the difference between a bank and a Ponzi Scheme.
- youessayyyaway 4y ago>Please explain to me the difference between a bank and a Ponzi Scheme. Banks are forced to abide by regulations and laws dictating how fractional-reserve organizations are allowed to operate. In return, peoples' deposits are backed by the government up to $250k (in the US). Ponzi schemes ignore regulations and laws, and their customers' deposits are not insured or backed by any organization. The laws that banks are forced to follow may be woefully insufficient, but the government is incentivized to prevent serious collapses because they would be on the hook for a lot of money. Retail customers are also less likely to start a run if they trust that someone will be there ready to hand over their cash when the dust settles.
- O__________O 4y ago250k is per entity, per bank — perfectly legal to use multiple banks and banks publicly offer this as a service to businesses and high net worth individuals. Example: https://www.sec.gov/oiea/investor-alerts-bulletins/ib_banksweep https://www.sec.gov/oiea/investor-alerts-bulletins/ib_banksw...
- Majromax 4y ago> Banks are forced to abide by regulations and laws dictating how fractional-reserve organizations are allowed to operate. In return, peoples' deposits are backed by the government up to $250k (in the US). Depositors also have first claim against assets in insolvency, so even uninsured accounts will be paid back before bondholders or equity owners. Even a well-intentioned crypto security has no such strict prioritization.
- sdze 4y agoI personally enjoy regulated banking very much :-) With boring central banks and banks that are heavily stress-tested and regulated.
- gonzo41 4y agoIf my bank withheld my withdrawals of my money, I'd not behave the most even tempered way. Whilst I DO think crypto is a scam, or at best a very terrible waste of time and effort from all involved. I will accept that I could be wrong. But, scam or not, this early turbulent history will cement a stigma of crypto being synonymous with grifters and scammers. I don't see a future in it. It'll be interesting to see if btc breaks through the 20k barrier today and what effect that has on the hype.
- kayamon 4y agoPeople mistake Bitcoin, which has no central custodian and will continue clearing transactions all day long, every ten minutes, immune to all interference, with the rest of 'crypto', which is a giant money-lending dumpster fire that isn't backed by anything. Once all the dust settles down Bitcoin will keep ticking along just like it's been doing for years.
- anon291 4y agoFor good reason... Bitcoin enabled this ecosystem, and a currency is ultimately only as good as its ecosystem. For example, Roman Denari are worth nothing as a currency [1]. No banking system accepts them. [1] Used Denari because it's an old currency I know. Of course, there's collector value, but there are other useless currencies today I've never heard of worth nothing on the collector's market too. Unfortunately, I can't cite any, given how useless they are today.
- gzer0 4y ago"Seeking Certainty in Uncertainty" Definitely think that their homepage slogan needs an update after this.
- smarx007 4y agoSo, they just declared technical bankruptcy? https://www.investopedia.com/terms/t/technicalbankruptcy.asp https://www.investopedia.com/terms/t/technicalbankruptcy.asp