Babel Finance Puts Hope In A New Stablecoin Project To Solve Financial Problems: Report

Babel Finance co-founder Yang Zhou is banking on a new stablecoin to pull the troubled cryptocurrency lender out of the financial crisis.

Last June, the Hong Kong-based project was one of three prominent firms to fail, forcing it to halt withdrawals. The company’s proprietary trading desk directed $766 million worth of client funds into risky business activities. Attention is now focused on the payment of debts.

debt repayment

Babel has proposed using the income generated by a decentralized finance project that mints “Babel Recovery Coins” to pay off the debt it owes to creditors. Zhou, who is also the sole director of Babel, believes that this new stablecoin can solve the financial problems of the cryptocurrency lender.

Yang previously resigned from his leadership position, but resumed later. according to a report According to Bloomberg, the project in question is called Hope, for which the executive has joined forces with some former Babel employees in Hong Kong.

Initially, Hope’s eponymous stablecoin will use Bitcoin (BTC) and Ether (ETH) as collateral. According to the websitethe new asset will maintain its value close to a dollar through arbitrage incentives for traders, in contrast to popular stablecoins like USDC, which are fully backed by cash and cash-equivalent assets.

Meanwhile, Zhou is also seeking to file a protection moratorium with Singapore’s high court. This would prevent creditors from taking further action against the company for up to six months while it seeks your approval for a restructuring plan.

Who is responsible for the losses?

Babel’s new project is touted as a ray of hope, but the report alleges that its co-founder Wang Li’s business activities contributed to its current state. The filing, seen by Bloomberg, stated that Li was “responsible” for losses that occurred due to “risky business activities” that were directed solely by the executive.

The company is estimated to have lost $524 million worth of Bitcoin, Ether and other crypto assets as a result. An additional $224 million was lost when counterparty collateral was liquidated after it failed to meet a large volume of margin calls. These accusations prompted Babel to remove Li from his leadership role in December last year.

Just one month before nearly succumbing to liquidity pressure, Babel raised $80 million in a Series B funding round led by Circle Ventures, 10T Holdings, Jenerations Capital, BAI Capital and Dragonfly Capital. Family Offices from the Asia-Pacific region also participated in the round, boosting the company’s valuation to $2 billion.