Babel Finance, a troubled Asian crypto lender thatSudden cessation of customer withdrawalslast month Suffering heavy losses due to Proprietary Trading with client funds according to the restructuring proposal
Babel Finance lost more than $280 million in bitcoin (BTC) and ETH due to Proprietary Trading failures. In particular, it lost around 8,000 BTC and 56,000 ETH in June after facing liquidation due to a market slump at important
“In the volatile week of June, when BTC suddenly dropped from 30k to 20k, it caused a significant loss in proprietary trading. This leads directly to the forced sale of multiple collateral accounts. with a loss of ~8,000 BTC and ~56,000 ETH.”
Because of these huge losses Babel’s credit and commercial department was therefore unable to obtain additional collateral (Margin call) from the contracting party
“Conclusion: One Point of Failure – The Proprietary Trading Team’s Failed Operation is beyond the company’s normal business. which runs smoothly with proper management and control.”
This is not the first time Babel Finance has been reported to involve client funds. In October 2020 there areThe leaked record points out.That the company took advantage of some of its users’ funds to boost bitcoin trading and faced potential default risks during the Black Thursday market crash that year.
At the time, Tether reportedly helped Babel Finance by extending the margin call deadline for Babel by one month. to give the company more time
A Babel Finance spokesman said the company “Working closely with clients, investors and other stakeholders and external consultants during this difficult time in the industry. because we believe This is the best path for a complete recovery and maximizing value for all parties.”
Babel’s Debt Restructuring Proposal
Part of the turnaround plan is Babel is now trying to raise hundreds of millions of dollars in debt and equity investments.
First, the company is trying to convert its largest $150 million debt into convertible bonds.
Additionally, it appears to have raised $250 million to $300 million in convertible bonds, and will then receive $200 million in revolving credit from its creditors. “For business revitalization”
If the plan is successful, Babel’s largest creditor will become a shareholder.
It remains to be seen whether Babel, backed by well-known investors such as Sequoia Capital China, Dan Tapiero’s 10T Holdings, Dragonfly Capital and Circle Ventures, will be able to raise new funding.
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