Babel Finance co-founder Yang Zhou is banking on a new stablecoin to pull the troubled crypto lender from the financial crisis.
Last June, Hong Kong-based project was one of the three prominent firms that floundered, forcing it to halt withdrawals. The company’s proprietary trading desk directed customer funds worth $766 million to risky trading activities. The focus is now on repaying the debts.
Repayment of Debt
Babel has proposed using the revenue generated by a decentralized finance project minting “Babel Recovery Coins” to repay the debt it owes to creditors. Zhou, who also happens to be the sole director of Babel, believes this new stablecoin can fix the crypto lender’s financial woes.
Yang previously stepped down from his leadership position but resumed later. According to a report by Bloomberg, the project in question is dubbed – Hope – for which the exec has joined forces with a few former Babel employees in Hong Kong.
Initially, Hope’s namesake stablecoin will use Bitcoin (BTC) and Ether (ETH) as collateral. According to the website, the new asset will maintain its value close to a dollar through arbitrage incentives for traders, in contrast to popular stablecoins such as USDC, which are fully backed by cash and cash-equivalent assets.
In the meantime, Zhou is also looking to file a moratorium of protection to the high court of Singapore. This would prevent the creditors from taking further action against the company for up to six months as it seeks their approval on a restructuring plan.
Who’s Responsible for the Losses?
Babel’s new project is being touted as a ray of hope, but the report alleges that its co-founder Wang Li’s trading activities contributed to its current state. The filing, as viewed by Bloomberg, stated that Li was “responsible” for the losses which transpired because of “the risky trading activities” that were instructed solely by the exec.
It is estimated that the firm 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 was unable to meet a large volume of margin calls. These allegations prompted Babel to get rid of Li from his leadership role in December last year.
Just a month before almost succumbing to liquidity pressure, Babel raised $80 million in a Series B financing 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, which boosted the company’s valuation to $2 billion.
The post Babel Finance Pins Hope on New Stablecoin Project to Resolve Financial Woes: Report appeared first on CryptoPotato.
Read the full story: Read More“>
Blog powered by G6
Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.
For any inquiries, please contact [email protected]