Troubled cryptocurrency lending firm Babel Finance has more time to repay debts to creditors like Deribit after suspending withdrawals in 2022.
A Singapore court has extended Babel Finance’s creditor protection for 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, allowing the company to implement its restructuring plans with a new decentralized finance (DeFi) project called Hope. Flex is re-overseeing Babel's restructuring process a few years after stepping down as CEO in 2021.
Babel's restructuring plan involves new tokens called "Babel Recovery Coins," designed to allow the struggling lender to generate income to repay its creditors as much as $800 million. Flex also wrote in an open letter on Twitter that on April 17, the Singapore High Court heard Babel's bankruptcy protection case and officially opened the in-court reorganization process. He noted that his main future focus will be on Project Hope, saying:
“In the coming international political changes, HOPE will be an important tool in our reconnection of the world. We are confident that our new team will continue to drive new projects forward with their hope and light.” According to previous reports, the co-founder of Flex launched the Hope DeFi project in mid-March 2023, positioning it as a combination of DeFi and centralized finance to achieve DeFi-level transparency and security as well as centralized financial-level access.
Another Babel co-founder, Yang Zhou, originally introduced the Hope project in early March, describing its native Babel Recovery Coin as a stablecoin minted based on Bitcoin as collateral. Bitcoin and Ether.The token is designed to maintain its 1:1 peg to the US dollar through arbitrage incentives for traders.
Babel is one of many crypto lending firms experiencing major liquidity issues due to the 2022 crypto bear market. The Hong Kong-based company suspended withdrawals and redemptions of its products in June, citing unusual liquidity pressures. Babel reportedly lost $280 million in proprietary transactions with client funds.
