Bloomberg News reports that Babel Finance, the distressed crypto lender that had frozen its withdrawals on Friday, revealed that it had won a reprieve related to the debt payments as it is battling to thrive under a turbulent drop in the cryptocurrency markets.
Babel, based in Hong Kong, said that the pressure on short-term liquidity has eased out considerably due to the reprieve. The same was revealed in a statement sent on Monday to Bloomberg, and later the note was published on the website. Flex Yang, the company’s co-founder, will divulge the details to the public once the progress has been made.
Babel is currently in a dialogue about potential solutions with the larger institutions, which also include setting up a new entity for taking over some debt, a person familiar with the case said, requesting anonymity.
Babel’s difficulties highlight the turbulence prevailing in the crypto sector, where at least one of the key players in the industry has frozen withdrawals. The reason for Babel’s withdrawals was attributed to unusual liquidity pressures.
The halt imposed on the withdrawals has led to a sudden reversal of fortunes for Sequoia Capital Babel, which is China-backed. A few weeks ago, it announced an $80 million funding round that has taken its valuation to $2 billion. There was an outstanding loan balance of the company, which amounted to more than $3 billion towards the end of last year.
Bloomberg News reports that weeks of a tumultuous market coupled with a series of liquidations have posed an existential threat for several industry participants.
Celsius Network Ltd., the competitor lender that had earlier frozen deposits in June, stated on Monday that it requires more time to stabilize the company’s liquidity and operations. The company posted on its blog that it is a time taking process.
Three Arrows Capital, the crypto hedge fund, has recruited legal and many financial advisers following the current year’s crypto selloff, left the company with huge losses, as stated by the co-founder of the company last week in Wall Street Journal.
Bitcoin was holding at a figure recorded above $20,000 as of Monday in New York in the afternoon. This is a level that Bloomberg Intelligence strategist Mike McGlone has stated as kin to approximately $5000 in 2018 and 2020 as a part of what is being seen in 2022 as the great reversion.
