Crypto lender Babel reaches deal on distressed debt repayments

Hong Kong-based Babel says agreement has eased ‘short-term liquidity pressure’

Picture: BLOOMBERG
Picture: BLOOMBERG

Babel Finance, the distressed crypto lender which froze withdrawals on Friday, said on Monday it won a reprieve on debt repayments as it battles to survive a tumultuous slump in cryptocurrency markets. 

Hong Kong-based Babel has “reached preliminary agreements on the repayment period of some debts, which has eased the company’s short-term liquidity pressure”, it said in a statement sent to Bloomberg and later posted to its website. Co-founder Flex Yang said the company “will disclose to the public” once they’ve made progress.

Babel is in talks with large institutions about potential solutions that include setting up a new entity to take over some of the debt, a person with knowledge of the matter said, asking not to be identified discussing private information. 

Babel’s difficulties highlight the turmoil sweeping the crypto industry, where at least one more major lender has frozen withdrawals and a prominent hedge fund is trying to stave off collapse. Babel cited “unusual liquidity pressures” for its decision to halt withdrawals. 

The person familiar with Babel’s plans didn’t say when the company might open its platform for withdrawals or name the lenders it’s in discussions with.

“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,” the company said in the statement.  

The halt on withdrawals marked a sudden reversal of fortunes for Sequoia Capital China-backed Babel, which less than a month ago announced an $80m funding round that put its valuation at $2b. The company had an outstanding loan balance of more than $3bn at the end of last year. 

A wave of liquidations and weeks of market tumult pose an existential threat to many industry participants. 

Celsius Network, the rival lender that froze deposits earlier in June, on Monday said it needs more time to stabilise its liquidity and operations. “This process will take time,” the company said on its blog. 

Crypto hedge fund Three Arrows Capital has hired legal and financial advisers after this year’s crypto sell-off left it with large losses, its co-founders told the Wall Street Journal last week. 

As of Monday afternoon in New York, bitcoin was holding above $20,000, a level that Bloomberg Intelligence strategist Mike McGlone described in a recent note as “akin to about $5,000 in 2018-20 as part of what we see as the great reversion of 2022.”

Bloomberg News. More stories like this are available on bloomberg.com