thecoinrise.com
A recent pitch deck from Babel Finance, one of the most embattled crypto firms, has shown that as much as $280 million in losses was recorded by the firm through trading with customer’s funds.
The proposal deck obtained by The Block showed that the market slump which saw Bitcoin’s price plunge from $30,000 to about $20,000 in June saw the firm lose around 8,000 BTC and 56,000 ETH worth approximately $280 million at the time.
“In that volatile week of June when BTC fell precipitously from 30k to 20k, unhedged positions in [proprietary trading] accounts chalked up significant losses, directly leading to forced liquidation of multiple Trading Accounts and wiped out ~8,000 BTC and ~56,000 ETH,” the deck reads.
The proposal deck did not just detail how the losses were incurred as well as the firm’s proposal to chart a positive way forward.
Babel Finance and Trading Misappropriation
According to the details shared, Babel Finance said the platform experienced a single point of failure as the “Proprietary Trading team’s failed operation falls outside of the company’s normal business which has otherwise been running smoothly with proper management and control.”
The deck revealed that despite the highly risky nature of the trades, appropriate risk control measures were not presented, plunging the firm into the state it ended up in.
Per a Coindesk report, such a scenario had played out earlier in 2020 when the firm was unable to meet a margin call, and Tether came to the firm’s rescue at the time according to leaked recordings of the transaction.
In its efforts to solve its current woes, Babel Finance is looking at converting its creditors into shareholders while also raising additional funds to cover up some other operational loopholes, in an encompassing restructuring.
With its distressed signs, it is quite unsure how Babel Finance will be able to gather new investors seeing it pulled $80 million in funding at a $2 billion valuation just before it halted withdrawals on its platform back in June.
While there was no comment about the proposal deck, Babel Finance said it is “working closely with clients, investors and other stakeholders and external advisors during this very difficult time in the industry as we believe that is the best path for a full recovery and value maximization for all the parties.”