Key takeaways:
- Troubled cryptocurrency lending company, Babel Finance, will have more time to repay creditors.
- Babel Finance intends to use a new decentralized finance scheme to pay off its $800M debt.
After halting withdrawals in 2022, troubled cryptocurrency lending company Babel Finance will have more time to repay creditors like Deribit.
According to co-founder Flex Yang, cryptocurrency lender Babel Finance has received a three-month extension to its creditor protection through July 21. Babel fell into issues during the cryptocurrency crash of last year and owes creditors up to $800 million.
The embargo, which will continue until July 21, according to Babel co-founder and former CEO Flex Yang, will allow the company to carry out its reorganization plan using a brand-new decentralized financing (DeFi) project named Hope. After leaving his position as CEO in 2021, Flex returned to oversee Babel’s reorganization process.
The “Babel Recovery Coins,” new tokens that are a part of Babel’s restructuring strategy, are intended to help the troubled lender earn income so that it can pay as much as $800 million in debt to its creditors.
The Singapore High Court heard Babel’s bankruptcy protection on April 17, kicking off the in-court reorganization process, Flex added in an open letter on Twitter. He stated that the Hope initiative would be his primary priority in the future:
“We are confident that our new team will continue to use their Hope and light to move the new project forward.”
As was previously said, the co-founder of Flex introduced the Hope DeFi project in the middle of March 2023, portraying it as a mix of DeFi and centralized money to offer DeFi-level access, security, and transparency, as well as access at the level of centralized finance.
Early in March, Yang Zhou, a different Babel co-founder, first revealed the Hope project, characterizing its native Babel Recovery Coin as a stablecoin created as collateral based on Bitcoin and Ether. The token is intended to keep its 1:1 peg with the dollar through incentives for traders to engage in arbitrage.
Babel was one of many crypto lending businesses with significant liquidity problems due to the 2022 bear market in cryptocurrencies. In June, the Hong Kong-based company stopped accepting redemptions and withdrawals from its products due to extraordinary liquidity challenges. According to reports, Babel lost $280 million on proprietary trades made with client money.
