After $766M Bitcoin, Ethereum Loss, Babel Plans to Launch ‘Recovery Coin’
In mid-2022, Babel Finance, a Hong Kong-based crypto lender, limited withdrawals and redemptions from its platform citing unusual liquidity pressures. Soon after, it was revealed that the lender lost more than $200 million in Bitcoin and Ethereum because it could not meet margin calls.
According to Bloomberg, Babel estimates that another $524 million worth of Bitcoin, Ethereum and other tokens were lost as a consequence of co-founder Wang Li’s trading activities. Thus, the proprietary trading desk reportedly incurred an order book deficit of $766 million.
Another co-founder and current director at Babel, Yang Zhou, is reportedly planning to file a “protection moratorium” with the Singapore High Court. He intends to ask creditors not to take action against the lender for a period of six months. Furthermore, he is also looking to get their approval on a restructuring plan.
Citing a recent filing seen, Bloomberg reported that the crypto lender has proposed repaying debt to creditors with revenue earned via a new DeFi project. Called “Babel Recovery Coins,” a top leader is banking on a new stablecoin to help solve the financial crisis.
Also read: Babel Finance lost $280 million in crypto using customer funds
Babel’s New Ray of “Hope”
The latest filing allegedly claims co-founder Wang Li was “responsible” for the losses. According to the document, the risky trading activities appear to have been solely directed by Wang. In particular, the director was fired from the company’s management in December last year. Via a text message to Bloomberg, he acknowledged that he knows about the court archive. However, he refrained from saying the same and did not share any other details.
Citing unnamed sources, Bloomberg reported,
“Yang – who has resumed leadership of Babel after previously stepping down – plans to build out the DeFi project at the center of the restructuring, called Hope, with a few former Babel employees in Hong Kong.”
The project’s stablecoin will initially use Bitcoin and Ethereum as collateral. According to the site, it will maintain its $1 stick via arbitrage incentives for traders.
