2024-06-21
Bitcoin Global News

Crypto lender Babel gets extended creditor protection in Singapore

Hong Kong-based Babel Finance will have more than a year to repay debts to its creditors after suspending withdrawals in June 2022.

Troubled cryptocurrency lending firm Babel Finance has more time to repay debts to creditors like Deribit after suspending withdrawals in 2022.

A court in Singapore has extended creditor protection for Babel Finance by another three months, Bloomberg reported on April 18.

According to Babel co-founder and former CEO Flex Yang, the moratorium will last until July 21, enabling the firm to pursue its restructuring plan via a new decentralized finance (DeFi) project called Hope. Flex returned to oversee Babel’s restructuring process a few years after stepping down from CEO role in 2021.

Flex Yang, former CEO of Babel Finance and founder of the Hope DeFi ecosystem. Source: TechCrunch

Babel’s restructuring plan involves new tokens called “Babel Recovery Coins,” which are aimed at allowing the troubled lender to generate revenue for repaying as much as $800 million to its creditors.

Flex also wrote in an open letter on Twitter that Babel’s bankruptcy protection was heard in the Singapore High Court on April 17, officially opening the in-court reorganization procedure. He noted that his main focus in the future would be the Hope project, stating:

“In the coming international political changes, HOPE will be an important tool for us to reconnect the world. […] We are confident that our new team will continue to use their hope and light to move the new project forward.”

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As previously reported, the co-founder of Flex launched the Hope DeFi project in mid-March 2023, positioning the initiative as a combination of DeFi and centralized finance to enable DeFi-level transparency and security and centralized finance-level access.

Related: Celsius reportedly prepping litigation against creditor for leaking internal info

Another Babel co-founder, Yang Zhou, initially introduced the Hope project in early March, describing its native Babel Recovery Coin as a stablecoin minted as collateral based on Bitcoin BTC $30,159 and Ether  ETHtickers down $2,087. The token is designed to maintain its 1:1 peg with the U.S. dollar through arbitrage incentives for traders.

Babel was one of many crypto lending companies that experienced major liquidity issues due to the bear crypto market in 2022. The Hong Kong-based firm suspended withdrawals and redemptions from its products in June, citing unusual liquidity pressures. Babel reportedly lost $280 million in proprietary trades with customer funds.

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Source : Cointelegraph.com