Babel lost $280 million due to hedged property trading: report

Troubled crypto lending platform Babel Finance lost more than $280 million in customer funds to beleaguered crypto lending platform Babel Finance after failing ownership trading took significant losses to the markets over the past few months, The Block reported on Friday, citing a restructuring proposal deck. .

The Asian lender faced liquidations due to a significant market collapse, losing nearly 8,000 bitcoin (BTC) and 56,000 ethereum (ETH) in June. As a result of these significant losses, Babel’s lending and trading divisions were unable to meet counterparties’ margin requests.

The company, which recently completed an $80 million Series B financing round and received a $2 billion valuation, halted withdrawals in June, citing unusual liquidity pressures.

A hedging position without a risky business

Per the report, the deck noted that unhedged positions in proprietary trading accounts suffered major losses during a turbulent week in June, when BTC suddenly dropped from $30,000 to $20,000, leading to the liquidation of several trading accounts and 8,000 BTC and 56,000 ETH were wiped out.

“Conclusion: Single Point of Failure – The failed operation of the Proprietary Trading Team is outside the normal business of the Company that would otherwise have been running smoothly with proper management and control,” Deck said.

Babylon’s proposed reorganization

Babel is currently attempting to raise hundreds of millions of dollars in debt and equity capital as part of its recovery strategy.

According to Deck, the first step is to convert $150 million of the largest creditors’ debt into convertible bonds.

It also plans to acquire $250 million to $300 million through convertible bonds, after which it will receive a $200 million revolving credit from creditors “for business revival.”

A request for comment from Livemint did not elicit a response from Babel Finance.

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