- 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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Celebrity meme coins controversy continues amid Pump.fun revenue dominance
Pump.fun outperformed the Ethereum blockchain on Tuesday after raking in $1.99 million. Following this achievement, a meme coin based on actress Sydney Sweeney was the subject of controversy after its developers dumped their bags on investors.
PEPE's on-chain metrics indicate potential rally after weeks of silence
PEPE has struggled to see any significant price move after reaching an all-time high in May. Increased adoption rate and low MVRV ratio indicate a bullish run may be on the horizon. A single PEPE outflow from Binance worth $14.7 million gives credence to signs of bullish expectation.
Ethereum has failed to overcome key resistance despite bullish sentiment surrounding ETH ETF
Ethereum (ETH) is down more than 1.4% on Tuesday following another ETH sale from the Ethereum Foundation. Meanwhile, crypto exchange Gemini's recent report reveals that ETH ETF could see about $5 billion in net inflows within six months of launch.
Crypto community blasts Polkadot following report of treasury spending
Polkadot reports $87 million of treasury spending during H1. Crypto community members expressed harsh feelings toward the DOT team's high spending. DOT is up more than 2% in the past 24 hours but risks correction following the report.
Bitcoin: BTC price correction could end in July, according to seasonal data
Bitcoin (BTC) price appears poised for a decline this week, influenced by slight outflows in US spot ETFs, selling activity among BTC miners, and a combined transfer of 4,690.28 BTC to centralized exchanges by the US and German governments.