The BRC-USDC and other "IOU" tokens that Babel Finance intends to issue to creditors will be based on BabeDAO, which is still the subject of relevant legal activities, claims cryptocurrency writer Wu. The BabeDAO dual-token concept consists of the governance token BABE and the underlying price token HOPE.
A sort of digital asset called an IOU token is used to represent debt owed by two parties. A contract that acknowledges a specific amount of debt owing is known as an IOU, which stands for "I owe you."
These tokens can be used to speed up transactions between two parties, such as the exchange of money, products, or services. IOU tokens have gained popularity as a secure and effective tool to conduct transactions since the introduction of blockchain technology.
Prior to this, Babel Finance disclosed a $280 million loss on proprietary trading. Among its main creditors are Genesis Zipmex and a few individual investors from Chinese-speaking regions.
The failure of Babel Finance's private trading cost it more than $280 million in Ether (ETH) and Bitcoin (BTC). In instance, in June, after being forced to liquidate due to a dramatic market downturn, it sustained losses of about 8,000 BTC and 56,000 ETH.
These large losses prevented Babel's loan and trading divisions from providing counterparties' requests for margin.
The Babel proprietary trading team claims that their orders were not documented in the system as such and were not supported by any term sheets. Additionally, an infinite sum of money was distributed by the company's wallet managers to trading accounts run by its proprietary trading team.