Crypto financial services provider Babel Finance has lost over $280 million as a result of failed trading decisions with client funds. The Block writes that the calculations were given in the restructuring proposal.

“During the volatile week in June, when Bitcoin fell from $30,000 to $30,000 $20,000unprotected positions [собственных торговых] accounts caused significant losses. The result was a forced liquidation with the loss of 8,000 BTC and ~56,000 ETH.” says document.

As a result, Babel Finance’s lending and trading departments were unable to meet the requirements of margin call counterparties.

“Losses on own trading transactions were outside of the ordinary business otherwise smoothly executed with proper management and control”specified in the offer.

The activities of this unit were not controlled by the trade department. No risk control criteria have been set for its employees, no profit and loss reporting has been made. No indication conditions are imposed for transactions, they are not recorded in the system.

Babel Finance admitted that the firm’s wallet management team provides “unlimited amounts of funds” to trading accounts managed by its trading team.

In 2020, suspicions arose that the company was allowing clients to “play with leverage” with their funds. Then the contractors of the crypto-financial services provider did not pay much attention to the emerging rumors. Tether Limited helped Babel Finance recover from bankruptcy by extending the loan repayment period from 48 hours to one month.

In an interview with the publication, firm representatives stated that they “work closely with customers, investors, other stakeholders and external consultants.”

The company aims to convert $150 million of its debt into convertible bonds and increase that number by another $250-300 million. Babel Finance also plans to open a $200 million revolving credit line.

In May, the crypto financial services provider closed its $80 million Series B funding round at a $2 billion valuation.

Recall that in June 2022, the company announced the suspension of payments and withdrawals from its own products due to lack of liquidity.

Later, Babel Finance representatives denied the bankruptcy reports and announced that “preliminary agreements” had been made for the payment of part of the debts.

To restructure the business, senior management brought in law firm Kirkland & Ellis and financial advisor Hulihan Lokey.

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