The calls for crypto regulation intensified as reports revealed that Babel Finance lost a huge sum to proprietary trading using customer funds. The Asian crypto platform that recently suspended its withdrawal lost over $280 million. According to a restructuring proposal, the platform lost over 8000 BTC and 56,000 ETH during June because of market volatility.
In a video published yesterday, the chairman of the Security and Exchange Commission, Gary Gensler, talked about the need of regulating crypto exchanges and platforms. The SEC is under a lot of pressure after millions of investors were affected by the series of crypto insolvencies during the bear market.
How Babel Lost Millions
On the 7th of June, 2022, BTC was trading at $31.3K and ETH was trading at $1,905. By the 19th of June, BTC and ETH had fallen down to $17.7K and $890 respectively. According to reports, this period of extreme volatility caused heavy losses and liquidity on unhedged positions held by Babel.
Following this, Babel failed to meet any margin calls and suspended its withdrawals. Babel has chalked up the losses to a single point of failure in the company. Babel claims that the rest of the company does not have similar issues.
Babel is not the first crypto platform to be accused. It was reported that Three Arrow Capital co-founder Zhu Su brought a yacht will the borrowed money. Celsius was also labeled as a Ponzi scheme by many after it suspended its withdrawals following a volatile period in the market.
Tightening Regulation Around Crypto Companies
In a video released yesterday, Gary Gensler takes shots at crypto platforms that continue to act in an erratic manner. He also called for regulation and explained the steps the SEC is poised to take. Gensler also took shots at market makers in the crypto ecosystem and called them a conflict of interest.
The SEC has been under tremendous pressure after millions of customers lost their crypto to bankrupt platforms. Pennsylvania senator Pat Toomey blasted the SEC for failing to protect the investors.
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