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Crypto lender Babel gets extended creditor protection in Singapore

Crypto lender Babel gets extended creditor protection in Singapore

Babel Finance, a struggling cryptocurrency lending company, has secured extra time to repay its debts to creditors such as Deribit after restricting withdrawals in 2022. Bloomberg reported on April 18 that a Singapore court has extended Babel Finance’s creditor protection for three more months. The company’s co-founder and former CEO, Flex Yang, said the moratorium will last until July 21, allowing the troubled firm to implement its restructuring plan via a new decentralized finance (DeFi) project called Hope. Yang returned to oversee the restructuring process some years after resigning from the CEO role in 2021.

Flex Yang, former CEO of Babel Finance and founder of the Hope DeFi ecosystem. Source: TechCrunch

Babel’s restructuring plan includes new tokens, called “Babel Recovery Coins,” that aim to generate revenue to repay up to $800m to its creditors. Yang further wrote in an open letter on Twitter that Singapore High Court had considered Babel’s bankruptcy protection and started a court reorganization process on April 17. He added that his primary focus would be on the Hope project, commenting:

“In the upcoming 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 move the new project forward.”

Babel’s co-founder, Yang Zhou, initially launched the Hope DeFi project in mid-March 2023, describing it as a combination of DeFi and centralized finance. Its native Babel Recovery Coin is a stablecoin loaned as a collateral based on the cryptocurrencies Bitcoin and Ether, designed to keep its 1:1 peg with the US dollar by rewarding arbitragers. Babel was one among many crypto lending firms that faced significant liquidity problems during the 2022 crypto bear market, having halted withdrawals and redemptions on its goods in June, citing unforeseen liquidity pressures. Babel has apparently lost $280 million of client funds in proprietary trades.