According to Babel, customers lost a total of $524 million in BTC, ETH, and other tokens due to Wang’s hazardous trading.
Babel Finance, one of the cryptocurrency loan companies affected by the bear market of 2022, is examining fresh reorganization prospects, including the minting of a new token.
Bloomberg reported on March 5 that Babel co-founder Yang Zhou plans to establish a new decentralized finance (DeFi) initiative in order to generate money to settle obligations due to creditors.
Under to Yang’s reorganization idea, a prospective DeFi project called Hope would manufacture a new stablecoin that would serve as a “recovery coin” for Babel.
In contrast to prominent stablecoins such as Tether (USDT) and USD Coin, Hope’s stablecoin would purportedly employ Bitcoin and Ethereum as collateral, preserving a 1:1 ratio with the U.S. dollar via arbitrage incentives for traders, according to the filing.
The paper also asserts that Wang Li, another co-founder of Babel, was responsible for the losses, stating that “the dangerous trading operations seem to have been completely directed by Wang.”
Wang resigned as CEO of Babel in December due to the company’s difficulties.
Babel estimates that the firm owes consumers up to $524 million in BTC, ETH, and other tokens as a result of losses allegedly caused by Wang’s hazardous trading actions.
According to reports, Babel’s counterparties liquidated collateral when the business was unable to fulfill a high amount of margin calls, resulting in a further $224 million loss.
As previously reported, Babel was one of a number of crypto lenders who had severe liquidity challenges in 2022 as a result of the cryptocurrency winter.
In June, the Hong Kong-based company stopped product withdrawals and redemptions, citing “exceptional liquidity difficulties.”
Voyager Digital, Celsius Network, Genesis Global, and Hodlnaut, to name a few of the industry’s largest lenders, have all had similar problems.
Genesis owes $150 million to Babel, its third largest listed creditor, according a Chapter 11 filing from January.
All of these firms are now working diligently to develop restructuring strategies that would allow them to pay their creditors and preserve their operations.
Voyager consumers voted in favor of a reorganization plan including Binance’s United States-based business, Binance.US, acquiring Voyager’s assets.