Babel Finance, the Hong Kong-based crypto lender that froze withdrawals last month, incurred “massive” losses while using customer funds for its own proprietary trading, according to a restructuring plan seen by Bloomberg.
Babel’s proprietary trading desk was the firm’s “single point of failure,” having received an “uncapped” amount of capital from the company’s own wealth-management team, the document, dated July 13, shows.
In total, accounts operated by the company’s proprietary trading team lost about 8,000 Bitcoin and 56,000 Ether during the crypto market’s plunge in June, according to the plan. These would have equated to roughly $225 million around the time of the events and about $280 million at current prices, according to Bloomberg calculations. Orders by the proprietary trading team were not recorded in the company’s systems and no risk controls were implemented, according to the document.
“In the volatile week of June when BTC fell precipitously from 30k to 20k, unhedged...
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