Babel Finance sought quick profits using the cryptocurrency funds of its users, but lost everything.
Cryptocurrency lender Babel Finance is on the verge of justice after it was reported that it used its clients’ funds to try to make money by speculating, but only caused a loss of up to 280 million dollars.
Babel Finance has suspended money withdrawals from its platform, creating chaos among its users. This case appears to be on the same path as Celsius Network, which has finally filed for bankruptcy .
The volatility of cryptocurrencies
Babel Finance promised great money returns to customers who kept their cryptocurrencies with them (in addition to allowing you to loan foreign currency). However, what he did not report was that he used other people’s bitcoins to trade them, falling into the market’s own speculation, but that it can also have millionaire negative consequences.
According to The Block , Babel Finance lost 8,000 bitcoins and 56,000 ethereums in June under this modality, about 280 million dollars at the average exchange rate.
According to the report, bitcoin’s drop to $20,000 “caused significant losses” that led to the liquidation of multiple trading accounts, taking thousands of cryptocurrencies with them .
Due to the financial crisis Raw, Babel Finance has suspended withdrawals from the platform citing “big fluctuations in the market”, but promising a restructuring plan.
But by operating “like a bank”, it also collapsed the economy of its partners. For example, Thailand-based exchange Zipmex filed for bankruptcy, saying it had invested $48 million in Babel and another $5 million in the now-infamous Celsius Network .
Babel Finance wants to convert 150 million dollars of its debt into bonds and start raising millions of investments to save its company. You’ll make it?