Babel’s losses included 8,000 BTC and 56,000 ETH, which were wiped out in unhedged proprietary trading positions, a recent detailed report cited an offer deck.
Babel Finance, a beleaguered crypto lender that halted customer withdrawals in June amid the crypto market crash, reportedly lost more than $280 million of its clients in bad trading bets, section informed of Citing the crypto company’s restructuring proposal deck.
According to the details in the offer, Babel Finance lost 8,000 bitcoin (BTC) and 56,000 ether (ETH) through proprietary trading. The failed bet happened last month as the platform faced liquidation amid massive deliveries in the crypto market.
The firm stated in the deck that as the price of BTC fell from $30,000 to $20,000, the position was without “Significant losses occurred, which directly led to the forced liquidation of several trading accounts.,
These accounts wiped out approximately 8k BTC and 56k ETH worth over $280 million in client funds.
Capitulation and Restructuring Plans
Babel’s dedication increased as its lending and trading units failed to meet margin calls – and no client funds to continue honoring withdrawals.
The trouble came shortly after the financial services provider raised $80 million in its Series B financing round in May. The financing, secured at a $2 billion valuation, saw investments from Generation Capital, BAI Capital, 10T, Circle Ventures and Dragonfly Capital among other investors.
The market downturn and the failure of proprietary trading have been trending Babel Finance along with other troubled crypto firms such as Voyager Digital and Celsius Network, which have filed for bankruptcy.
The collapse and subsequent transition to crypto hedge fund Three Arrows Capital (3AC) added to the uncertainty.
As part of its restructuring plans, the Babel team is looking to convert $150 million of its largest creditors’ debt into convertible bonds. The lender is looking to add $250 million to $300 million to its survival kit through convertible bonds, and further funding is expected to come from a $200 million revolving credit facility.
The plan, according to the proposal deck, is to eventually include Babel Finance’s major creditors as shareholders.