Crypto lender Babel Finance announces steps to improve its liquidity situation

Quick Take

  • Babel Finance says it has reached “preliminary agreements” with major counterparties “on the repayment period of some debts.”
  • The announcement comes three days after Babel Finance abruptly halted client withdrawals.

Crypto financial services firm Babel Finance, which abruptly suspended withdrawals last week, has announced several steps to improve its liquidity situation.

Sharing the news with The Block in a statement on Monday, Babel Finance said it carried out an emergency assessment of its business operations to understand its liquidity status and has also reached “preliminary agreements on the repayment period of some debts” with major counterparties and customers, “which has eased the company's short-term liquidity pressure.”

Today’s announcement doesn’t mean withdrawals — which were suspended on Friday because it was facing "unusual liquidity pressures" — are resumed, however. The company said it has “actively communicated with shareholders and potential investors, and will continue to communicate and obtain liquidity support.”

Amid reports that Babel Finance has informed partners it's insolvent, a company spokesperson told The Block that “no, we never told partners that.”

When asked whether Babel Finance is facing liquidity issues due to exposure to troubled crypto hedge fund Three Arrows Capital, the spokesperson said, "Babel Finance has no business with Three Arrow Capital."

Unicorn issues


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Last month, Babel Finance entered the unicorn club firm after raising $80 million in a Series B funding round at a $2 billion valuation.

Investors in the round included Jeneration Capital, Dan Tapiero's 10T Holdings, Dragonfly Capital and Circle Ventures.

Founded in 2018, Hong Kong-based Babel Finance provides lending and trading services to institutional investors. It claimed to have about 500 clients and 170 employees as of last month.

The liquidity issues of Babel Finance mark the latest blow to the crypto space. In recent weeks, Terra, Celsius and Three Arrows Capital have all suffered financial problems.

Last month, Terra's ecosystem completely collapsed, losing $40 billion in value. Last week, crypto lending firm Celsius halted customer withdrawals. And earlier this week, top crypto hedge fund Three Arrows Capital faced massive liquidations after failing to meet margin call requirements.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Yogita Khatri is a senior reporter at The Block, covering all things crypto. As one of the earliest team members, Yogita has played a pivotal role in breaking numerous stories, exclusives and scoops. With nearly 3,000 articles under her belt, Yogita holds the records as The Block's most-published and most-read author of all time. Prior to joining The Block, Yogita worked at crypto publication CoinDesk and The Economic Times, where she wrote on personal finance. To contact her, email: [email protected]. For her latest work, follow her on X @Yogita_Khatri5.