Last Updated on September 25, 2022 by Bitfinsider

As news broke that Babel Finance had lost a sizable sum through proprietary trading using customer cash, calls for crypto regulation grew louder. The Asian cryptocurrency exchange had just froze withdrawals prior to the $280 million loss. The site reportedly lost more than 8000 BTC and 56,000 ETH in June due to market volatility, according to a restructuring proposal.

Gary Gensler, the chairman of the Security and Exchange Commission, discussed the necessity of regulating cryptocurrency exchanges and platforms in a video that was released yesterday. After a string of cryptocurrency insolvencies during the bear market caused millions of investors to lose money, the SEC is under a lot of pressure.

How did Babel lost millions?

BTC was trading at $31.3K on June 7th, 2022, and ETH was at $1,905. BTC and ETH have decreased to $17.7K and $890, respectively, on June 19th. According to sources, Babel’s unhedged holdings suffered significant losses and liquidity during this period of high volatility.

After that, Babel’s withdrawals were put on hold because it was unable to meet any margin requirements. Babel has attributed the losses to the company’s single point of failure. According to Babel, the rest of the business does not have the same problems.

Regulation of Crypto Companies is Being Tightened

Gary Gensler criticizes crypto platforms that continue to behave erratically in a video that was published yesterday. Additionally, he urged regulation and outlined the actions the SEC is preparing to take. In the crypto environment, Gensler also disparaged market makers and referred to them as having a conflict of interest.

Due to the fact that numerous clients lost their cryptocurrency to insolvent sites, the SEC has come under a lot of criticism. Senator Pat Toomey of Pennsylvania criticized the SEC for failing to safeguard investors.

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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.