Embattled cryptocurrency lender Babel Finance has proposed the issuance of a new stablecoin backed by crypto through a decentralized finance (DeFi) platform, in a bid to repay its creditors after losing $766M last year, Bloomberg reported Monday, citing people familiar with the matter. The Hong Kong-based firm in June 2022 was forced to suspend customer withdrawals and redemptions, citing "unusual liquidity pressure" at the time. The liquidity crunch then drove Babel to employ investment bank Houlihan Lokey ( HLI ) as it looked at restructuring. Earlier, Babel filed a moratorium extension to the high court of Singapore to prohibit its creditors from making claims for up to six months in the hope that its restructuring plan comes to fruition by that deadline. Co-founder Wang Li allegedly was responsible for Babel's outsized losses in 2022, having lost $524M worth of bitcoin ( BTC-USD ), ethereum ( ETH-USD ) and other tokens owned by the company and its customers, Bloomberg noted, adding that $224M more was lost after lenders liquidated collateral after failing to meet a slew of margin calls. In turn, Yang Zhou, co-founder and sole director of Babel, partnered with a number of former employees to build out a DeFi platform -- called Hope -- to mint so-called "Babel Recovery Coins," the people told Bloomberg . The dollar-pegged stablecoin will initially use bitcoin ( BTC-USD ) and ether ( ETH-USD ) as collateral, according to the proposal . During its financial crisis last summer, Babel was said to have lost $280M worth of bitcoin and ether while trading clients funds.
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