Singapore Court Rejects $5M Claim Against Babel Finance Co-Founder

A Singapore court has rejected a US$5 million claim against Wang Li, co-founder of Babel Finance, over the collapse of the company's crypto fund. The High Court found that Wang did not dishonestly assist in any breach of duty owed to investor Parastate Labs. The case arose from the collapse of Babel Group, which was insolvent by June 2022 with a shortfall of about US$400 million.

In March 2022, Parastate invested five million USDT into one of Babel's funds, subject to a three-month lock-up period. The investment agreement stated that the money would be held in a designated sub-account on Deribit, a cryptocurrency derivatives exchange.

However, by June 2022, the crypto market was in turmoil and Babel was facing liquidity problems. Deribit began demanding that Babel top up its accounts, but eventually consolidated Babel's accounts into a main account before liquidating the trading positions, resulting in a deficit of about US$12.5 million.

The court rejected Parastate's argument that Wang had dishonestly assisted breaches of trust and fiduciary duties by Babel entities. The judge found no evidence that the Babel unit managing Parastate's money had used the investment as collateral for its own trading, and that the company did not owe Parastate fiduciary duties.