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Economy 4 hours ago (Jun 21, 2022 12:35AM ET)
© Reuters. A representations of cryptocurrencies in this illustration taken, January 24, 2022. REUTERS/Dado Ruvic/Illustration
(Reuters) – Babel Finance, the Hong Kong-based crypto lender which suspended withdrawals and redemption of crypto assets on Friday, said it has reached an agreement with counterparties on the repayment of some debts to ease short-term liquidity.
Cryptocurrency valuations have plunged in recent weeks as investors dump risky assets in a rising interest rate environment. , which reached a record high of $69,000 in November, lost more than half its value this year.
In an update on its website on Monday, Babel said it carried out an emergency assessment of its business operations to determine the company’s liquidity status.
Crypto lenders gather crypto deposits from retail customers and re-invest 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 meltdown.
“Babel Finance will actively fulfill its legal responsibilities to customers and strive to avoid further transmission and diffusion of liquidity risks,” the company said.
Babel, which has 500 clients and only deals in bitcoin, ethereum and stablecoins, raised $80 million in a funding round last month, valuing it at $2 billion. It had ended last year with $3 billion of loan balances on its balance sheet.