Babel wants to repay creditors via special ‘recovery coins’: Report

Babel Finance, one of many cryptocurrency lending firms shaken by the bear market of 2022, is exploring new restructuring opportunities involving minting a new token.Babel co-founder Yang Zhou is planning to build a new decentralized finance (DeFi) project in order to generate revenue to repay debts owed to creditors, Bloomberg reported on March 5.The potential DeFi project, called Hope, aims to mint a new stablecoin to serve as a “recovery coin” for Babel, according to Yang’s restructuring proposal.Unlike major stablecoins like Tether (USDT) and USD Coin (USDC), Hope’s namesake stablecoin will reportedly use Bitcoin (BTC) and Ether (ETH) as collateral, maintaining its 1:1 ratio with the U.S. dollar through arbitrage incentives for traders, the filing notes.The document also alleges that another Babel co-founder, Wang Li, was responsible for the losses, stipulating that “the risky trading activities appear to have been instructed solely by Wang.” Wang stepped down from his CEO position at Babel in December amid the company’s issues.According to Babel’s estimations, the company owes customers as much as $524 million worth of BTC, ETH and other cryptocurrencies due to losses allegedly caused by Wang’s risky trading activities. Another $224 million was reportedly lost when Babel counterparties liquidated collateral after the firm could not meet a large volume of margin calls.As previously reported, Babel was one of several crypto lenders that experienced serious liquidity issues due to the cryptocurrency winter in 2022. The Hong Kong-based firm suspended withdrawals and redemptions from its products in June, citing “unusual liquidity pressures.”Related: Hodlnaut founders propose selling the firm instead of liquidationSeveral prominent industry lenders — including Voyager Digital, Celsius Network, Genesis Global and Hodlnaut — have faced similar issues. Genesis owes $150 million to Babel, its third-biggest named creditor, according to a January Chapter 11 filing. All of these companies are now working hard to come up with restructuring plans to pay their creditors and save their businesses.In late February, Voyager customers voted for a restructuring plan that included Binance’s United States-based business, Binance.US, acquiring Voyager’s assets.

Disclaimer: Along with publishing our own news, we get news from various sources namely from news wires ANI, PTI, other reputed finance portals and individual journalists. We are not legally liable for any inaccuracies in the news and expect the reader to do their own due diligence.

Source link