2 months ago 1 min read

Financial Creditor Protection Extension Request Paused By Babel Finance

babel finance-luna-deribit-hong kong-singapore-eth

Due to concerns raised by creditor Deribit, a Singapore court has postponed deciding whether to extend creditor protection in order to gather more information on the proposed restructuring.

The largest Bitcoin and Ether options exchange, Deribit, has asked for Alvarez & Marsal to be appointed as an impartial attorney to oversee the reorganization plan. Deribit did not immediately reply to an email sent after business hours.

Who left day-to-day management in late 2021 and has since returned to supervise the company's rehabilitation, the current moratorium of protection against creditor action for Hong Kong-based Babel Finance, which also has business in Singapore, expires on April 5. Between $750 million and $800 million is what Babel owes in debt. It was one of many bitcoin companies that struggled following the collapse of digital assets last year.

As part of Babel's restructuring plan, a new stablecoin will be created. The plan calls for repaying financial debt with funds obtained from a brand-new venture that produces "Babel Recovery Coins."

That part of Babel Finance's reorganization strategy entails using funds from a decentralized stablecoin initiative dubbed "Hope" to settle debts. Similar to the infamous DAI technique (collateralized by USDC, ETH) or the UST approach, Hope will use BTC and ETH as collateral and tie the price to USD (collateralized with LUNA). The collateral is not established by the same company that developed LUNA-UST, which is how Hope and Terra's stablecoins differ from each other.

The court approved a temporary suspension until Babel's creditor protection case is reheard on April 17.

The Sequoia Capital China-backed cryptocurrency lender Babel Finance suffered losses when it used customer money for its own trading, forcing the lender to cease withdrawals in June 2022 as the value of digital tokens fell.

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