Babel Finance Files for Moratorium, Works on New Stablecoin to Repay US$766M Loss

Babel Finance Files for Moratorium, Works on New Stablecoin to Repay US$766M Loss

by March 8, 2023

Hong Kong-based crypto lender Babel Finance has filed applications in the Singapore High Court to buy more time from its creditors for up to six months.

The moratorium is intended to allow the restructuring efforts made by Babel Finance in the past few months to come to fruition, said the company in a statement.

The company said that it has received interest from investors which will enable it to “recapitalise its balance sheet and relaunch its business”. Babel said that the discussions were ongoing and is targeting binding commitments by May 2023.

In the meantime, Babel Finance will continue to work with its creditors, stakeholders and prospective investors in the coming months to finalise its restructuring plans.

“The Restructuring Plan will be implemented via one or more schemes of arrangement in relevant jurisdictions, including Singapore,” said Babel Finance. The company is looking to file the scheme by June 2023.

Flex Yang, a founder of Babel Finance, is amongst the investors providing capital for the recapitalisation and is expected to take on a leadership position in the relaunched business.

The troubled crypto lender has been under increasing pressure to pay back its creditors following a US$$766 million loss last year. Babel Finance’s Co-founder Wang Li lost US$$524 million due to risky trading activities and has been removed from the company’s leadership position for this.

The firm suffered another blow when it lost another US$224 million when its lenders liquidated collateral that underpinned loans issued to Babel.

Babel is reportedly planning to issue a crypto-backed stablecoin backed by bitcoin (BTC) and ether (ETH) in an attempt to repay its creditors.

Yang Zhou, co-founder and sole director of Babel, along with several former employees are working on a DeFi platform named ‘Hope’ that will feature a stablecoin with the same name.