Singapore High Court rules Babel Finance co-founder Wang Li not liable for Parastate’s US$5 million loss

Singapore’s High Court dismissed a US$5 million claim against Babel Finance co-founder Wang Li on September 1, 2026, ruling in a 139-page judgment that he was not personally liable for investor Parastate Labs’ losses in the 2022 collapse of Babel’s trading accounts.

Justice Sushil Nair, in a 139-page judgment delivered on Sept. 1, found that Wang had not dishonestly assisted any breach of duty owed to US-based cryptocurrency investor Parastate Labs. The court also rejected Parastate’s arguments that its investment was held on trust and that Babel’s asset-management business owed it fiduciary duties.

The decision comes after the Babel Finance collapse, which left the wider Babel Group insolvent by June 2022, with a reported shortfall of about US$400 million. Babel Finance was the brand used by the group for its cryptocurrency business.

Babel Finance collapse wipes out US$5m investment

Parastate invested US$5 million worth of USDT, a cryptocurrency designed to track the value of the US dollar, in the Babel Quant Alpha USDT Fund in March 2022.

Under the investment agreement, governed by Singapore law, the funds were to be held in a designated sub-account on Deribit, a cryptocurrency derivatives exchange.

The situation deteriorated sharply in June as cryptocurrency markets came under pressure and Babel faced mounting liquidity problems.

On June 14, Deribit began demanding that Babel replenish three trading accounts whose values had fallen below required levels. According to the judgment, the exchange required Babel to deposit 200 Bitcoin and 2,000 Ether every hour to cover the shortfall.

Babel deposited 200 Bitcoin, but Deribit began liquidating its positions less than an hour later.

Wang objected to the move, describing it as “a big hurt” and pointing to Babel’s long-standing relationship with Deribit.

He also attempted to negotiate with the exchange, including proposing that Deribit liquidate only one of Babel’s accounts while returning the others to Babel’s control. Babel would then make the required top-ups within 48 hours.

Those efforts failed.

Deribit eventually consolidated Babel’s various accounts into a main account and liquidated the trading positions. The resulting deficit across Babel’s Deribit accounts was about US$12.5 million.

The court found that the liquidation ultimately wiped out investments belonging to Babel Group customers that were held through the exchange.

“This meant that the Babel Group’s customers’ investments, insofar as they were held by the Babel Group… with Deribit, were completely wiped out,” — Justice Sushil Nair, Singapore High Court.

The Babel Finance collapse became apparent to customers days later. On June 17, Babel told customers that the cryptocurrency market had experienced “major fluctuations” and that it was facing “unusual liquidity pressures”.

The company suspended redemptions and withdrawals from its financial products for an unspecified period.

Parastate discovered that its investment had disappeared when it attempted to withdraw the funds on June 19. It formally demanded the return of its US$5 million in USDT the following day.

Wang subsequently told a Parastate representative that Deribit had liquidated Babel’s main account and its sub-accounts.

Court rejects fiduciary and trust claims

Parastate subsequently sued Wang, alleging that he had dishonestly assisted breaches of trust and fiduciary duties by Babel entities.

The investor argued that Babel had held its investment on trust and should have intervened when Deribit consolidated and liquidated the accounts. It also argued that Wang’s failure to respond to certain Deribit messages amounted to assistance in those alleged breaches.

Justice Nair rejected the claims.

The judge found no evidence that the Babel entity managing Parastate’s funds had used the investment as collateral for its own trading. Such conduct would have breached its obligations to the investor.

More importantly, the court concluded that Babel did not owe Parastate fiduciary duties.

Parastate had relied on language in its investment agreement stating that Babel would manage its assets “on behalf of and for the benefit of” Parastate. It also pointed to the phrase, “We have your best interest in mind”.

The court found that this wording was insufficient to establish a fiduciary relationship.

“To say that this slogan should be elevated to a fiduciary undertaking to act in the sole interests of Parastate was, with respect, a hopeless argument,” — Justice Sushil Nair, Singapore High Court.

The judge also emphasized Parastate’s sophistication as an investor. The company was an institutional cryptocurrency investor, while its representative, Chen Jiayi, had several years of experience in the industry.

Parastate had also obtained legal advice before entering into the investment agreement.

“Parastate’s decision to enter into the (agreement) was therefore a considered commercial decision made with the benefit of legal advice,” — Justice Sushil Nair, Singapore High Court.

The ruling therefore rejected the argument that Parastate could treat its investment as protected by trust or fiduciary obligations.

Wang found not to have benefited from Babel’s failure

The court also rejected the allegation that Wang personally benefited from the liquidation of Babel’s accounts.

Instead, Justice Nair found that the cross-liquidation caused significant losses to the Babel Group and had severe consequences for its asset-management operations.

For Wang personally, the Babel Finance collapse resulted in his stake in Babel entities becoming “virtually worthless”, according to the judgment.

The judge further found that Wang had taken steps to prevent the consolidation and liquidation of the accounts.

Rather than assisting in conduct that harmed Parastate, the evidence showed that Wang had attempted to prevent the liquidation, although those efforts were unsuccessful.

Nair said Wang had “in fact attempted – albeit unsuccessfully to protect the Babel Group’s customers’ interests (including Parastate’s)”.

The court also considered Parastate’s allegation that Babel had made misleading claims about its financial position while soliciting investments.

Babel had described itself as having a “healthy balance sheet”. However, the judge rejected Parastate’s interpretation that this represented Babel as literally holding US$7 billion in cryptocurrency assets.

“To say that they had objectively understood the Babel Group as having US$7 billion of cryptocurrencies across its balance sheet therefore cuts no ice in the face of what was obviously a hyperbolic sales puff,” — Justice Sushil Nair, Singapore High Court.

The judge noted that Parastate and Chen were sophisticated cryptocurrency investors and were aware that Babel had been valued at US$2 billion during a fundraising round in May 2022.

The Babel Finance collapse therefore did not result in personal liability for Wang on the claims brought by Parastate.

Justice Nair dismissed Parastate’s claim in its entirety.

The judgment is part of the wider legal fallout from the Babel Finance collapse and the Babel Group’s insolvency. The Singapore High Court judgment records that the group was insolvent by at least June 2022, with a shortfall of about US$400 million.

Parastate was represented by FC Legal Asia, while Wang was represented by RCLT Law Corporation.

Primary source: Singapore High Court judgment — Parastate Labs, Inc v Wang Li and others [2026] SGHC 178