The Block has received access to proposals for the restructuring of the credit service Babel Finance. It turned out that the company lost $280 million of client funds when trading cryptocurrencies.
There is a suspicion that Babel Finance traders did not disdain margin transactions and, as a result of the market fall, positions were closed on a margin call. As a result, the company lost about 8,000 bitcoins and 56,000 ethers.
“In June, when BTC plummeted from $30,000 to $20,000, our unhedged accounts suffered significant losses. Several trading positions were directly liquidated and we lost about 8,000 BTC and 56,000 ETH. The failure of our trading team brought the entire business out of the normal. At the same time, we usually conduct business with the necessary level of control,” the document says.
Apparently, the company gave carte blanche to its trading team and issued funds from Babel Finance wallets on the first request. Therefore, it is not surprising that traders lost such a significant amount of funds and threatened the existence of the company itself.
Now Babel Finance is looking for a restructuring opportunity. Companies need hundreds of millions of dollars to pay off their debts. To do this, the company plans to transfer debts to its largest creditors in the total amount of $150 million into convertible bonds, as well as issue additional bonds. With their help, Babel management wants to raise from $250M to $300M and get an additional loan of $200M to "recover business". At the same time, the largest creditors will become shareholders of the company.
Recall that the service has been suspended
withdrawal of funds to clients in mid-June.
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