Singapore Expands Creditor Protection Crypto Lender Babel

Singapore Expands Creditor Protection Crypto Lender Babel

Hong-Kong-based crypto lender Babel Finance that operated out of Singapore has been granted an extension of creditor protection by a Singaporean court, according to Flex Yang, the company’s co-founder.

The extension is expected to last approximately three months, giving the crypto lender additional time to address any outstanding financial obligations and potentially avoid insolvency.

During the expansion, the crypto firm plans to put a restructuring plan in place via a new decentralized finance project called Hope. This initiative will allow the firm to explore new opportunities for growth and sustainability within the crypto lending market.

Deribit, the top Bitcoin and Ether options exchange and a creditor of Babel Finance, had expressed concern about the restructuring plan. To this end, the exchange asked an independent adviser, Alvarez & Marsal, to monitor the plan.

During the bearish crypto market of 2022, Babel Finance was one of several crypto lending companies that had experienced significant liquidity challenges.

In June 2022, the crypto lending platform was forced to halt withdrawals and redemptions from its products due to unexpected liquidity pressures. Reports indicate that the crypto lender suffered a $280 million loss from proprietary trades involving customer funds.

Babel Finance owes creditors up to $800 million

Babel Finance is in debt to its creditors for an amount that may exceed 800 million dollars. In an effort to repay this debt, the company has requested an extended period of creditor protection to implement its restructuring plan.

This plan involves the issuance of “Babel Recovery Coins”, which will be generated by a new decentralized finance project. The revenue generated by this project will be used to repay the company’s outstanding debt to its creditors.

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In a recent Twitter Flex Yang, co-founder of Babel Finance, revealed that the Singapore High Court officially initiated the legal restructuring procedure for the company on April 17. Yang emphasized his commitment to the new decentralized finance (DeFi) project called Hope, saying it would be his primary focus going forward.

He stated:

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 bring the new project forward.

Babel Recovery Coin

In early March, Yang Zhou, another co-founder of Babel Finance, introduced the Hope project. He explained that the project’s initial token, Babel Recovery Coin, is a stable coin that is secured by Bitcoin and Ethereum. The token is designed to maintain a 1:1 peg to the US dollar through the use of arbitrage incentives for traders.

Babel launched Hope in mid-March 2023. The project aims to combine the benefits of DeFi and centralized finance, providing both the transparency and security that DeFi offers, while providing the ease of access that centralized finance provides.

Bitcoin was trading at $30,400 on the one-day chart | Source: BTCUSD on TradingView

Featured image from Business Times, chart from TradingView.com

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