Babel Finance Mulls Crypto-Backed Stablecoin to Repay $766M: Report
The firm's sole director is hoping to roll out a DeFi platform to begin paying back creditors.
Troubled Hong Kong crypto lender Babel Finance is planning to issue a crypto-backed stablecoin in unison with a decentralized-finance (DeFi) platform in an attempt to repay creditors following a $766 million loss last year, according to a Bloomberg report.
The lender froze withdrawals last June, citing "unusual liquidity pressures" following a market downturn that spawned out of the $60 billion collapse of the Terra network.
Babel has filed a moratorium extension that would prevent creditors from making claims for at least another six months, according to a press release. The filing, according to Bloomberg, alleges that co-founder Wang Li racked up $524 million in proprietary trading losses, with another $224 million being lost after lenders liquidated collateral that underpinned loans issued to Babel.
Yang Zhou, co-founder and sole director of Babel Finance, has teamed up with several former employees to build Hope - a DeFi platform that will feature a stablecoin of the same name.
It draws comparison with the terra USD (UST) stablecoin that prompted the market collapse last year, because that token was also backed with crypto as opposed to fiat currencies and equivalents like USD coin (USDC) and tether (USDT).
UPDATE (March 6, 2023, 15:48 UTC): Adds link to Babel Finance press release in reference to moratorium application.
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