Sequoia China-Backed Crypto Financial Services Firm Hits $2 Billion Valuation

Babel Finance, a Hong Kong-based crypto lender and asset manager, has secured $80 million from investors including crypto venture firms Dragonfly Capital and Circle Ventures, ramping up its valuation to $2 billion four years after it was founded.

Major investors of the round are Chinese tech-focused fund Jeneration Capital, U.S. crypto private equity firm 10T Holdings, as well as existing backers that include BAI Capital, the Asian investment arm of German media conglomerate Bertelsmann, Babel Finance said on Wednesday.

Babel Finance, which set up a new office in Singapore last September, said it will use the capital to fund its global expansion plan. The startup added that it will bolster its compliance team and seek regulatory approval in the jurisdictions it operates. Babel Finance has applied for licenses in Hong Kong, Luxembourg, Britain and has “obtained business qualifications in many jurisdictions,” the firm said.

“The crypto financial market is full of opportunities and hidden risks,” Del Wang, cofounder and CEO of Babel Finance, said in a statement. “The retail market and altcoins may have higher profit margins, but we pay more attention to the long-term development of the industry and aim to lead in institutional financial services and innovation.”

“This not only helps to overcome the many uncertainties in the early stage of the industry, including regulatory and market uncertainties, it also protects our customers to the greatest extent,” he added.

Babel Finance rode a wave of growing interest in cryptocurrencies last May, pulling $40 million in a funding round led by venture capital firm Sequoia Capital China, American investment firm Tiger Global Management, Dragonfly Capital, BAI Capital and Bertelsmann, among others.

However, its latest funding round comes as the crypto market is struggling to recover from the spectacular collapse of Terraform Labs’s algorithmic stablecoin. TerraUSD UST and its sister token Luna LUNA crashed to near zero this month, sending a ripple effect across the crypto market that saw more than $300 billion worth of wealth evaporate within days. The crash has put many investors in the red and has wiped out nearly $60 billion from the portfolio of the wealthiest people in the crypto industry.

Babel Finance, which offers clients access to bitcoin, ether and stablecoins, said it has no exposure to TerraUSD and Luna. The firm added that all of its “counterparts are looking good” and that Terra’s debacle has so far not affected its businesses.

Established in 2018, Babel Finance said it provides lending, asset management, brokerage and mining services to about 500 institutional clients. Its core lending business hit $3 billion in outstanding loans and its derivatives trading service reached an average monthly volume of $800 million at the end of 2021, according to the firm, adding that these were the most updated figures it could provide.