Babel Finance, which collapsed with Celsius (CEL), announced a new altcoin project. This is expected to help restructure Babel Finance. Here are the details…
Babel Finance announces altcoin project
Embattled crypto lender Babel Finance envisions a restructuring effort centered around a new stablecoin project called Babel Recovery Coin. Yang Zhou, co-founder and sole director of Babel, pins his hopes on a new stablecoin. The firm stopped withdrawals in June 2022 following similar action by Celsius. According to a Bloomberg report dated March 6, Zhou plans to apply for a moratorium to the Singapore high court. It will require creditors to take no action for up to six months while seeking approval for the restructuring plan.
According to the plan, debts will be repaid with the proceeds from the new DeFi project, which includes Babel Recovery Coins. The documentation also claims that Wang Li, co-founder of Babel Finance, was responsible for the losses. He was removed from the leadership in December. The filing states that “risky trading activities were only instructed by Wang”. The crypto lender reportedly lost $280 million in client funds due to these risky activities. However, the firm estimates that $524 million worth of BTC, ETH and others were lost. According to Bloomberg, another $224 was lost when the counterparty collateral was liquidated.
The name of the new stablecoin is “HOPE”: It will be sold at a discount
The stablecoin, called HOPE, will be backed by Bitcoin and Ethereum. It will use these two as collateral to maintain a dollar peg while offering arbitrage opportunities for participants. According to the documents, the stablecoin “will be launched at a discounted price of $0.50 and will gradually reach the dollar-stabilized level as the cryptocurrency market recovers.” HOPE will trade at a premium or discount based on the tracking price, depending on market demand. The website stated that LightDAO will keep its crypto reserves on-chain.
Earlier this month, Babel Finance selected Eleven International as its public relations agency. The firm began working with Babel in 2020 as the company began expanding its crypto lending and trading business in the Asian region. Kirkland and Ellis and Carey Olsen act as legal counsel for the restructuring plan. In May 2022, Babel Finance completed an $80 million funding round at a $2 billion valuation. Also, investors at the time included Generation Capital and DragonFly Capital.
As we reported as Kriptokoin.com, Babel is among the few crypto credit institutions that have suffered from the 2022 bear market. Voyager Digital, Celsius Network, and Genesis Global have filed for bankruptcy with Genesis over $150 million in debt to Babel.
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