Babel is betting on a creative new stablecoin to get it out of its financial crisis.
On March 6th, Babel filed a moratorium of protection at the General Division of the High Court of the Republic of Singapore.
According to a press release, Babel’s moratorium application is “intended to allow the restructuring efforts made by Babel Finance in the past few months to come to fruition.”
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In the press release, regarding its restructuring plan, Babel noted:
Babel Finance will continue to work with its creditors, stakeholders and prospective investors in the coming months to finalize the definitive documentation for the Restructuring Plan. The Restructuring Plan will be implemented via one or more schemes of arrangement (the “Scheme”) in relevant jurisdictions, including Singapore.
The restructuring plan would see the emergence of a new stablecoin called “Hope.” Creditors would be paid from the revenue generated by the DeFi project that mints the Hope coins.
The proposed restructuring plan rests on a DeFi project. Babel’s co-founder Yang Zhou had previously stepped down from the company to work on Hope. It is worth noting that the company was built in collaboration with former Babel employees in Hong Kong.
“Hope” stablecoin would use Bitcoin (BTC) and Ethereum (ETH) as collateral while maintaining its value to the USD via arbitrage incentives. According to the Bloomberg report, the restructuring plan is being advised by Kirkland & Ellis and Carey Olsen.
It is worth noting that Babel plans to file schemes of arrangement by June 2023.
Babel’s troubles began in 2022 with the collapse of the crypto markets. In June, the company halted withdrawal and redemptions, claiming that the move was caused by “unusual liquidity pressures.”