The troubled crypto lending firm Babel Finance is working on a new plan to raise money through a crypto-backed stablecoin.
The new stablecoin that is being proposed is called Babel Recovery Coin. The plan is for the coin to maintain a $1 price in the market through a system of trading incentives, and backing by bitcoin (BTC) and ethereum (ETH).
The new coin has been proposed by Babel Finance’s co-founder Yang Zhou, who is now the sole director of the Singapore-based company, as a way to repay creditors while giving the company a chance to continue operating.
The news of the recovery plan was first reported on by Bloomberg, and later discussed by the crypto community on Twitter, where one user ridiculed the proposal as an attempt to “make it all back in one trade:”
Moratorium of protection filed
According to the Bloomberg report, Yang has now filed a moratorium of protection to the high court of Singapore, asking the court to prevent creditors from acting against the company for six months while the recovery plan is negotiated.
In the filing, Yang also reportedly blamed Babel’s troubles on co-founder Wang Li, which left the company in December last year. It is estimated that $525 million of BTC, ETH and other cryptocurrencies were lost as a result of trading activities under Wang’s direction.
“[…] the risky trading activities appear to have been instructed solely by Wang,” the filing said, per Bloomberg.
Neither Wang Li nor Yang Zhou have so far publicly commented on the report.
Similarities with other stablecoins
Being backed by BTC and ETH, Babel Recovery Coin has some commonalities with decentralized stablecoins like MakerDAO’s DAI, which is backed by a basket of other cryptocurrencies and stablecoins. It also brings to memory the failed algorithmic stablecoin TerraUSD (UST), which the disgraced Terra founder Do Kwon backed with BTC before it collapsed.
Babel Finance started in China with the backing of a number of prominent China-focused investors, including Sequoia Capital China, Tiger Global and Dragonfly Capital. The firm later opened up shop in Singapore, where it is now headquartered.
Babel is one of many crypto lending firms that have faced trouble during the latest crypto market downturn. Other firms in the same category include the bankrupt US-based crypto lenders Celsius, BlockFi, and Voyager Digital, as well as bankrupt crypto hedge fund Three Arrows Capital (3AC).
