Babel Finance has been able to address some of its closest liquidity problems. The Hong Kong-based crypto lender reached a debt settlement deal with some counterparties it has.
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It was initially reported that the firm temporarily suspended redemption and withdrawals. The event which took place on the 17th of June was said to be the result of unusual liquidity pressure. The firm said the present bearish market is experiencing it like never before.
Babel Finance said it took the restrictive step to protect its clients. It also said it communicated with all parties involved in and affected by the action.
In a follow-up that was released on the 20th of June, Babel Finance said it has taken three steps. It said the steps are geared towards easing its present liquidity challenges.
The said steps include first, conducting an urgent examination of the firm’s business model. The second step is to effectively communicate the situation with investors and shareholders. The third and final step is to arrive at a preliminary agreement for repaying some of the debts.
Babel Finance did not reveal specific details regarding plans for the debt repayment. There are no talks of the interest rates involved or maturity dates. The firm, however, said that it has engaged closely with counterparties and major clients.
It said it has gotten a preliminary agreement on the payment of some debts. The development helps to ease the firm’s liquidity pressure in the short term.
How Long Can Clients’ Understanding Last?
Babel Finance equally said that it spoke with some of its investors and shareholders about the possibility of getting liquidity support. It also said it will actively carry out its right responsibility to clients. It also promised to try to avoid more transmission of liquidity risks as well as its diffusion.
Babel Finance thanks its customers for their support and understanding at a time like this. The firm hopes to get more of such support from its partners.
Babel Finance’s liquidity problems arose barely a month after it secured $80 million in its Series B funding. The firm had a valuation of $2 billion at the funding. In 2021, the firm secured $40 million in its Series A funding.
The Series A funding round was topped by Zoo Capital and Sequoia Capital China amongst others. The firm offers its selected clients of about 500 people exposure to Bitcoin, Ethereum, and other stablecoins.
Babel Finance is in the same boat with a number of crypto companies currently facing liquidity problems. It is an accompanying result of the general bearish condition in the crypto market. Other companies with the same challenges include Three Arrows Capital, Celsius, and Finblox amongst others.
According to reports, Celsius and Finblox are currently planning to put a hold on withdrawals.