- Babel Finance blamed its trading desk’s $766 million loss on co-founder Wang Li.
- Yang Zhou, the sole director of Babel is planning to file a moratorium of protection from creditors.
- Yang plans to restructure Babel Finance through a stablecoin ‘Hope,’ that uses Bitcoin and Ethereum as collateral.
Babel Finance owes $766 million to creditors after running an order-book deficit of $766 million using customer funds. The company’s proprietary trading desk lost customer funds to risky trading activities that Babel attributes to co-founder Wang Li.
Also read: Ethereum blockchain deploys feature to help ETH users recover crypto if they lose private keys
Babel Finance alleges co-founder Wang Li of losing $766 million to trading activities
Babel Finance was hit by a crypto market meltdown after the firm’s proprietary trading desk ran up an order-book deficit of $766 million using customer funds. A recent filing by Babel alleges that co-founder Wang Li who was removed from the company’s leadership in December was responsible for the losses, contending that “the risky trading activities appear to have been instructed solely by Wang.”
According to a document viewed by Bloomberg News, the crypto financial service provider has proposed the repayment of debt owed to creditors with revenue generated by a new decentralized finance project minting “Babel Recovery Coins.”
The executive believes a new stablecoin can resolve the troubled crypto lender’s financial crisis. Yang is working on filing a moratorium of protection to the high court of Singapore, asking creditors not to take further action against the company for up to six months, while seeking approval for a restructuring plan.
The repayment plan with the new stablecoin to pay back creditors
The plan details a new project, Hope's namesake stablecoin that uses Bitcoin and Ether as collateral, and maintains its value close to a dollar through arbitrage incentives for traders. Popular stablecoins pegged to the US Dollar are fully backed by cash and cash-equivalent assets, in contrast to this Babel’s new stablecoin would use BTC or ETH as collateral. It remains to be seen whether a stablecoin can assist in restructuring the $766 million debt that Babel owes to its creditors.
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