High Court rejects US$5m claim against Babel Finance co-founder over crypto fund collapse

SINGAPORE – An investor failed in its bid to recover US$5 million from the co-founder of collapsed cryptocurrency company Babel Finance after its investment was wiped out during a mass liquidation of the company’s trading accounts in 2022.

The High Court on Sept 1 found that co-founder Wang Li, who was responsible for Babel Finance’s trading strategies, did not dishonestly assist in any breach of duty owed to investor Parastate Labs.

Justice Sushil Nair, who will become Singapore’s fifth Chief Justice in February 2027, also rejected Parastate’s argument that its investment was held on trust for it, or that the company managing its money owed it fiduciary duties.

He said in a 139-page judgment that the evidence showed Wang had in fact tried to prevent the liquidation of Babel’s accounts on the Deribit cryptocurrency exchange.

The judgment arose from the collapse of Babel Group, which was insolvent by June 2022, with a shortfall of about US$400 million. Babel Finance is the brand name of the group’s cryptocurrency business.

Parastate, a United States-incorporated cryptocurrency investor, had put five million USDT – a cryptocurrency designed to track the value of the US dollar – into one of Babel’s funds in March 2022.