Cryptocurrency lending company Babel Finance is looking to create a decentralized stablecoin to overcome the huge debt owed to customers due to events in 2022.
Babel Finance co-founder Yang Zhou, a crypto lender that was hit hard by the mid-2022 crypto market crashes, is planning to create a decentralized stablecoin and use it. use the revenue to cover a $766 million debt owed to customers.
Mr. Yang Zhou is filing a petition for protection with the Singapore court, asking the court to ask the creditor not to take legal action against Babel within the next 6 months to allow more time for restructuring.
Babel Finance’s restructuring plan includes a plan to pay debts with the revenue of a decentralized stablecoin project called “Hope”, according to sources from Babel Finance. Bloomberg.
A top executive at Babel Finance is betting a stablecoin can resolve the troubled crypto lender’s financial crisis, which came to a head last year when it frozen withdrawals https://t.co/5ypGL4Z1V3
— Bloomberg Crypto (@crypto) March 5, 2023
Hope will use BTC and ETH as collateral and pegged the price to USD, similar to the mechanism of the infamous DAI (collateralized with USDC, ETH) or UST (collateralized with LUNA). The difference between Hope and Terra’s stablecoin is that the collateral is independent of the project, instead of LUNA-UST being created by the same entity.
Babel’s side also accused Wang Li, another co-founder of the company, of being negligent in the management process and causing $ 766 million in damages to customers’ money. Mr. Wang Li was removed from his leadership positions at Babel Finance in December 2022.
Babel’s total assets in deficit included $524 million in BTC, ETH, and other altcoins lost due to Wang’s trading activities, and $224 million in collateral liquidated by other entities when the company failed to meet the requirements. Timely request for deposit.
Babel Finance is a cryptocurrency lending company established in China in 2018, rapidly growing thanks to the local market. By May 2022, the company had raised $80 million at a valuation of up to $2 billion.
The chain collapse of the cryptocurrency market in 2022 has caused a series of centralized crypto business models (also known as CeFi) to go bankrupt, such as Celsius, Voyager, Genesis. Babel Finance is the third largest creditor of Genesis with the amount of 150 million USD.