Cryptocurrency platform Babel Finance allegedly used its clients’ resources to trade on its own account, resulting in losses of $ 280 million. This follows strong downward movements last June, which incidentally led the company to suspend withdrawals.
Babel Finance would use client funds on its own account
According to our colleagues at The Block, the platform Babel Finance allegedly suffered $ 280 million in losses while trading with the assets of its customers. According to an internal document, this represents an equivalent of 8,000 BTC and 56,000 ETH.
The facts would therefore have occurred last June during the bearish leg that brought Bitcoin from $ 30,000 to less than $ 20,000. Afterwards, the platform has suspended withdrawals on June 17, simply citing liquidity problems:
“Due to the current situation, Babel Finance is facing unusual liquidity pressures. During this period, refunds and withdrawals […] will be temporarily suspended. “
The sharp fall we experienced at that moment would have done it undergo cascade liquidations at Babel Finance. Even if the company has it trading serviceit is not specified to what extent he has been authorized to use these cryptocurrencies or not.
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While the company was worth $ 2 billion after raising 80 million in early May, it now joins the ranks of struggling crypto projects. These events lead Babel Finance to explore new strategies to stay afloat.
The platform would then seek to convert part of its debts into bonds and stocks. It would also like to raise up to $ 300 million in the same way. This process would then allow the company’s creditors to become shareholders.
If nothing guarantees Babel Finance’s survival, once again, it is the end customers who are in a bad position. Also in this case the question arises transparency of centralized platforms. These events are therefore a reminder of the importance of self-custody training of digital assets.
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Source: The block
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