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Three crypto firms are bad this week, and things could get worse

Three crypto firms are bad this week, and things could get worse

This week has shown the average investor just how connected cryptocurrency companies are. Two firms have halted withdrawals, and a cryptocurrency hedge fund is in trouble. Celsius Network, Babel Finance and Three Arrows Capital are faltering, and it is not yet clear how widespread the losses could be.

The week began on Sunday night with the announcement of Celsius Network, a giant crypto lending company, that it would halt withdrawals and transfers. After that, the value of bitcoin and other cryptocurrencies, already in a slide that some call the "crypto winter", and fell, and five days later, the news hasn't improved much.

All three firms managed other people's money. CNBC says Celsius Network has attracted retail investors, with Babel Finance having 500 customers, which raised $80 million in funding a month ago. According to Fortune, 3AC, which invests in crypto startups, managed $10 billion in assets in March. The ripple effect from the firm crisis is likely to affect the broader cryptocurrency ecosystem.

The first is Celsius, which has published the same statement in the weeks since its freeze: an FAQ that doesn't tell investors when or if they will get access to its funds. CEO Alex Mashinsky tweeted that the team was working "non-stop" and thanked unnamed people for their patience and support, without commenting on the company's report of hiring restructuring lawyers.

The company had $12 billion in assets under management as of May. Mashinsky designed Celsius as a hybrid decentralized/centralized financing approach that could be equivalent to lending securities. But Celsius lost millions after the Badgerdao hack and another 35,000 ETH last summer, when Ethereum staking service Stakehound apparently lost private keys, and its tokens became worthless, according to a report from CoinDesk. according. It did not inform the customers about the loss. CoinDesk compared the 2008 collapse of Celsius to Lehman Brothers, which shook the financial markets.

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