NEW YORK (BLOOMBERG) - Babel Finance, the distressed crypto lender which froze withdrawals last Friday (June 17), said it has won a reprieve on debt repayments as it battles to survive a tumultuous slump in cryptocurrency markets.

Hong Kong-based Babel has "reached preliminary agreements on the repayment period of some debts, which has eased the company's short-term liquidity pressure", it said in a statement sent to Bloomberg on Monday and later posted to its website.

Co-founder Flex Yang told Bloomberg that the company "will disclose to the public" once they have made progress.

Babel is in talks with large institutions about potential solutions that include setting up a new entity to take over some of the debts, a source with knowledge of the matter said, asking not to be identified as he is discussing private information.

Babel's difficulties highlight the turmoil sweeping the crypto industry, where at least one more major lender has frozen withdrawals and a prominent hedge fund is trying to stave off collapse.

Babel cited "unusual liquidity pressures" for its decision to halt withdrawals.

The source familiar with Babel's plans did not say when the company might open its platform for withdrawals or name the lenders it is in discussions with.

"Given the current context of severe market volatility, Babel Finance's management will continue to communicate closely with customers, counterparties and other partners, and provide updates in a timely and transparent manner," said the company in the statement.

The halt on withdrawals marked a sudden reversal of fortunes for Sequoia Capital China-backed Babel, which less than a month ago announced an US$80 million (S$111 million) funding round that put its valuation at US$2 billion.

The company had an outstanding loan balance of more than US$3 billion at the end of last year.

With more than US$2 billion wiped off the value of cryptocurrencies since they peaked last year, a wave of liquidations now represents an existential threat to many industry participants.

Celsius Network, the rival lender that froze deposits earlier this month, on Monday said it needs more time to stabilise its liquidity and operations.

"This process will take time," it said on its blog.

Crypto hedge fund Three Arrows Capital has hired legal and financial advisers after this year's crypto sell-off left it with huge losses, its co-founders told the Wall Street Journal last week.