Crypto lending platform Babel Finance reaches counterparty debt agreement

Hong Kong-based cryptocurrency lending firm Babel Finance has eased some of its current liquidity issues by entering into debt repayment agreements with some counterparties.

As previously reported by Cointelegraph, Babel Finance announced a suspension of redemptions and withdrawals on June 17, citing “unusual liquidity pressure” in the current bear market. The company said it was acting swiftly to protect customers and was communicating with "all relevant parties".

In an update published on June 20, Babel Finance stated that it has since taken three steps to help ease the current liquidity situation. These include: conducting an emergency assessment of the company's business operations, communicating with shareholders/investors, and reaching a "preliminary agreement" on some debt repayments.

The company did not specify details of the debt repayment plan, such as interest rates or maturity dates, but noted:

"We communicated with the main counterparty and relevant customers, and reached a preliminary agreement on the repayment period of some debts, which relieved the company's short-term liquidity pressure."

The company also stated that it has communicated with certain shareholders and investors about the possibility of obtaining liquidity support, and will "actively fulfill its legal responsibilities to customers, and strive to avoid the further spread and proliferation of liquidity risks."

The company, which raised $80 million in Series B funding just a month ago at a valuation of $2 billion, is having liquidity problems. Last year, the company also received US$40 million in Series A financing led by All Things Capital, Sequoia Capital China, Dragonfly Capital and Tiger Global Management.

According to Babel Finance, the firm provides financial exposure to Bitcoin (BTC), Ether (ETH), and stablecoins to “approximately 500 select clients.”

In this round of encryption bear market, in addition to Babel Finance, there are many encryption companies that have encountered liquidity problems, including Three Arrows Capital, Celsius, and Finblox.