Crypto lender Babel Finance gets debt repayment reprieve after withdrawals freeze

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A representation of cryptocurrencies in this illustration taken January 24, 2022. REUTERS/Dado Ruvic/Illustration

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June 20 (Reuters) – Babel Finance, the Hong Kong-based crypto lender that suspended withdrawals and redemptions of crypto assets on Friday, said it had reached an agreement with counterparties on the repayment of certain debts to facilitate liquidity short term.

Cryptocurrency valuations have plunged in recent weeks as investors dump risky assets amid a rising interest rate environment. Bitcoin BTC=BTSP, which hit a record high of $69,000 in November, has lost more than half of its value this year.

In an update on its website Monday, Babel said it had performed an emergency assessment of its business operations to determine the company’s liquidity status.

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Crypto lenders collect crypto deposits from retail customers and reinvest them, proclaiming double-digit returns and attracting tens of billions of dollars in assets. However, lenders have been unable to redeem their clients’ assets during the recent crisis.

“Babel Finance will actively fulfill its legal responsibilities to its clients and strive to avoid further transmission and diffusion of liquidity risk,” the company said.

Babel, which has 500 customers and deals only in bitcoin, ethereum and stablecoins, raised $80 million in a funding round last month, valuing it at $2 billion. It ended last year with $3 billion in loan balances on its balance sheet. Read more

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Reporting by Akriti Sharma in Bengaluru; Editing by Richard Chang

Our standards: The Thomson Reuters Trust Principles.

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