Embattled crypto lending firm Babel Finance envisions a restructuring effort centered around a new stable asset project called Babel Recovery Coin.

Babel’s co-founder and sole director Yang Zhou is pinning hopes on a new stablecoin. The firm halted withdrawals in June 2022 following similar action by Celsius.

Zhou is planning to file a moratorium of protection to the high court of Singapore, according to a March 6 Bloomberg report. It will be a request for creditors to hold off taking action for up to six months while it seeks approval for the restructuring plan.

According to the plan, debts will be repaid with revenue from the new DeFi project involving Babel Recovery Coins.

Co-founder Yang Zhou is planning to file 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

sir judge. we can make it all back in one trade. we need 6 months.https://t.co/AxuZq7pOVd

The filing also alleges that Babel Finance co-founder, Wang Li, was responsible for the losses. He was removed from leadership in December. The filing stated, “the risky trading activities appear to have been instructed solely by Wang.”

It was reported at the time that the crypto lender lost $280 million in customer funds due to these risky activities.

However, the firm estimates $524 million worth of BTC, ETH, and others were lost. A further $224 was lost when counterparty collateral was liquidated, according to Bloomberg.  

The HOPE stablecoin called will be Bitcoin and Ethereum-backed. It will use these two as collateral to maintain a dollar peg while offering arbitrage opportunities for participants.

According to the documentation, the stablecoin will be ‘launched at a discount price of $0.50 and gradually achieving peg as the cryptocurrency market recovers.’

HOPE will trade at either a premium or discount to its tracking price, depending on market demand. The website stated that LightDAO would hold the crypto reserves on chain.

Earlier this month, Babel Finance named Eleven International as its PR agency. The firm began working with Babel in 2020 when the company started expanding its crypto lending and trading business across Asia. Kirkland and Ellis and Carey Olsen are the legal advisors on the restructuring plan.

In May 2022, Babel Finance completed an $80 million funding round with a valuation of $2 billion. Furthermore, investors at the time included Jeneration Capital and DragonFly Capital.

Babel is among several crypto lenders that suffered from the 2022 bear market. Voyager Digital, Celsius Network, and Genesis Global have all filed for bankruptcy with Genesis owing $150 million to Babel.

The post Babel Finance Turns to ‘Recovery Coins’ After Ousted Co-Founder’s Crypto Trading Snafu appeared first on BeInCrypto.

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