Distressed crypto lender Babel wins reprieve on debt repayments

Babel Finance, the distressed crypto lender which froze withdrawals on Friday, said 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 on Monday and later posted to its website. Co-founder Flex Yang told Bloomberg 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.

Read more: Crypto Tumult Spreads as Lender Babel Puts Freeze on 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 $80 million funding round that put its valuation at $2 billion. The company had an outstanding loan balance of more than $3 billion at the end of last year.

Read more: Crypto Firm Babel Hits $2 Billion Valuation in Funding Round.

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.”