(Bloomberg) -- 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 positions in these accounts chalked up significant losses, directly leading to forced liquidation of multiple trading accounts,” the restructuring document, first reported by The Block, reads. “Due to these massive losses, lending department and trading department were unable to meet margin calls from counterparties, resulting in equity depletion.”

Read more: Crypto Lender Babel Hires Kirkland as Adviser for Restructuring

A Babel spokesperson declined to comment on the content of the document, adding the company is “working closely with clients, investors and other stakeholders and external advisers 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.”

Babel, according to the restructuring document, was trying to raise $250 million to $300 million with convertible bonds and obtain a $200 million revolving credit line. The plan was made before the company hired Kirkland & Ellis to advise it on its restructuring, according to a person familiar with the matter who declined to be identified discussing confidential information. Babel also recently hired Houlihan Lokey to explore options. 

In May, Babel raised funding in a round that valued it at $2 billion.

©2022 Bloomberg L.P.