The Babel Finance cryptocurrency platform allegedly used its clients’ assets to trade for its own account, leading to $280 million in losses. This follows strong downward moves last June, which incidentally led the company to suspend withdrawals.
Babel Finance allegedly used client funds for its own account
According to our colleagues from The Block, the platform BabelFinance allegedly suffered $280 million in losses while trading with the assets of its clients. According to an internal document, this represents an equivalent of 8,000 BTC and 56,000 ETH.
The facts would therefore have taken place last June during the downward leg that brought Bitcoin from $30,000 to below $20,000. Following this, the platform has suspended withdrawals on June 17, simply mentioning liquidity problems:
“Due to the current situation, Babel Finance is facing unusual liquidity pressures. During this period, redemptions and withdrawals […] will be temporarily suspended. »
The sharp fall that we experienced at that time would then have made undergo cascading liquidations at BabelFinance. Although the company does have trading servicesit is not specified to what extent it was authorized or not to use these cryptocurrencies.
👉 To go further – Find all of our trading tutorials
The platform that simplifies trading
Buy crypto in minutes
A necessary restructuring
While the company was valued at $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 thus seek to convert part of its debts into bonds and stocks. She 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 the survival of Babel Finance, once again, it is the end customers who find themselves in a bad position. Here again the question arises of the transparency of centralized platforms. These events are therefore a reminder of the importance of training in self-custody of digital assets.
👉 Also in the news – Celsius confirms the leak of its users’ emails – Watch out for phishing attacks
The French unicorn of crypto wallets
A complete crypto experience, from buying to securing
Source: The Block
Get a crypto news recap every Sunday 👌 And that’s it.