Babel Finance will issue new token to pay off debts
2023.03.06 11:58
Babel Finance will issue new token to pay off debts
By Kristina Sobol
Budrigannews.com – One of the many cryptocurrency lending businesses that was shaken by the bear market in 2022 is Babel Finance. It is looking into new opportunities for restructuring that involve making a new token.
Bloomberg reported on March 5 that Yang Zhou, co-founder of Babel, intends to construct a brand new decentralized finance (DeFi) project to generate revenue for debt repayment.
Yang’s restructuring proposal says that the Hope project, a possible DeFi project, wants to create a new stablecoin to act as a “recovery coin” for Babel.
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, according to the filing. This is in contrast to major stablecoins like Tether (USDT) and USD Coin (USDC).
According to the document, “the risky trading activities appear to have been instructed solely by Wang,” another Babel co-founder was to blame for the losses. In light of the difficulties facing Babel, Wang resigned as CEO in December.
Babel estimates that the company owes customers up to $524 million in BTC, ETH, and other cryptocurrencies as a result of losses that were allegedly brought on by Wang’s risky trading activities. Babel counterparties reportedly lost an additional $224 million when they liquidated collateral after the company was unable to respond to a large number of margin calls.
As was previously mentioned, the cryptocurrency winter of 2022 resulted in Babel being one of several crypto lenders that ran into serious liquidity issues. In June, the company with headquarters in Hong Kong halted product withdrawals and redemptions citing “unusual liquidity pressures.”
Similar difficulties have beset Voyager Digital, Celsius Network, Genesis Global, and Hodlnaut, all prominent industry lenders. According to a January Chapter 11 filing, Genesis owes Babel, its third-biggest named creditor, $150 million. In order to pay their creditors and save their businesses, each of these businesses is currently hard at work devising restructuring strategies.
Voyager customers voted in favor of a restructuring plan that included Binance, Binance’s American subsidiary. US, purchasing the assets of Voyager.
