The struggling cryptocurrency lender Babel Finance has suggested a new crypto project called “Babel Recovery Coin“, stating that it will repay creditors with the proceeds generated by this new proposal following suffering $766 million in losses last year.
a recent bloomberg report He claims that Yang Zhou, co-founder and sole administrator of Babel, would have placed his trust in this new defi currency. He hopes that this will put an end to the financial problem of the companywhich began when withdrawals were suspended in June 2022 following Celsius took similar measures.
The co-founder filed a protection petition with the Singapore courtpleading with Babel Finance’s creditors to be patient and refrain from taking any legal action once morest the lender for at least six months while the company seeks court permission for a restructuring plan.
BABEL FINANCE WILL LAUNCH TWO TOKENS
The concept is described as a dual token ecosystem that includes the Light Token and the stablecoins fully reserved (HOPE). Ethereum and bitcoin will support the HOPE stablecoin. It will offer participants the possibility of carrying out arbitrations using both as collateral to maintain the parity of the dollar.
According to the plan, the proceeds from the new DeFi project incorporating Babel Recovery Coins would be used to pay off debts.
Digital asset lenders have suffered death blows as a result of last year’s cryptocurrency crash, which was arguably precipitated by the failure of Terraform Labs. These lenders can effectively function as unregulated banks accepting crypto deposits and trading frequently between they.
Major lenders such as Voyager Digital Ltd., Celsius Network and Genesis Global were affected by the crisis and they have since declared bankruptcy.
Babel Finance’s problems, however, were allegedly due to its proprietary trading desk using client funds and running up a shortfall in its order book of $766 million.
Wang Li, who was ousted as director of Babel in December, would be responsible for the losses, according to the lawsuit. He claims that Wang appears to have been the only person in charge of the dangerous business activity.
Wang’s trading activity, according to Babel, caused $524 million worth of losses in bitcoin (BTC), Ether (ETH) and other digital assets belonging to the company and its clients. Due to the company’s inability to execute multiple margin calls, counterparties had to liquidate their collateral, resulting in additional losses of $224 million.