BENGALURU (REUTERS) - Hong Kong-based Babel Finance temporarily suspended the withdrawals and redemption of crypto assets on Friday (June 17), as the crypto lender scrambles to pay its clients after the recent slump in the digital currency market.

Cryptocurrency valuations have plunged in recent weeks as investors dump risky assets in a rising rate environment, with Bitcoin, which reached a record high of US$69,000 (S$96,000) in November, having lost more than half its value this year.

"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," said the company.

Crypto lenders gather crypto deposits from retail customers and reinvest them, proclaiming double-digit returns and attracting tens of billions of dollars in assets. However, the recent meltdown has lenders unable to redeem their clients' assets.

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

Earlier this week, United States-based retail crypto lending platform Celsius Network froze withdrawals and transfers between accounts "to stabilise liquidity" as the collapse of cryptocurrency TerraUSD in May triggered a rise in redemptions.