General Division of the High Court · Decided 1 September 2026

An investor's claims against a group founder were dismissed in full

Parastate Labs, Inc v Wang Li and others

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[2026] SGHC 178Case no. Originating Claim No 130 of 2022

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An investor's claims against a group founder were dismissed in full

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Introduction
[1] HC/OC 130/2022 (“OC 130”) is a claim that has arisen in the aftermath of the collapse of the Babel group of companies (“Babel Group”), which comprises of at least 16 known entities incorporated in Singapore, Hong Kong, the Cayman Islands, the British Virgin Islands (“BVI”), Luxembourg and the United States of America (“USA”). The Babel Group, which operated substantial businesses in the fields of cryptocurrency lending and asset management, has been insolvent to the tune of US$400m from at least June 2022. The fourth defendant, the holding company of the Babel Group, has since entered into, and obtained the court’s sanction of, a scheme of arrangement which had the effect of combining the claims against all of the entities in the Babel Group into a single scheme to be compromised together.
[2] The claimant, Parastate Labs, Inc (“Parastate”), is an investor in a cryptocurrency fund managed by the Babel Group. The cryptocurrencies which it had invested with the Babel Group have been wiped out following a sell-off precipitated by its failure to meet margin calls on its trading positions with a cryptocurrency exchange platform. Dissatisfied with the returns promised by the Babel Group’s scheme of arrangement, Parastate has decided to pursue OC 130 against the first defendant (Wang Li), who is one of the founders of the Babel Group, for a sum equivalent in value to its invested cryptocurrencies. It seeks to hold Wang Li personally liable for such a sum by way of claims in dishonest assistance, fraudulent misrepresentation and unlawful means conspiracy. It has, however, discontinued its claims against the second to fourth defendants.
[3] Having considered the parties’ submissions and the evidence, I dismiss OC 130 in its entirety.
Facts
The parties
[4] The claimant, Parastate, is a corporation incorporated in the state of Delaware in the United States of America. It runs what it calls “a multi-chain smart contract platform” and provides blockchain solutions to its customers. Chen Jiayi, a co-founder and director of Parastate, is the sole witness of Parastate in OC 130.
[5] The fourth defendant, Babel Holdings Ltd (“BHL”), is a company incorporated in the Cayman Islands on 26 March 2019 by Wang Li and Yang Zhou (the second defendant). BHL is the holding company of 15 subsidiaries incorporated in, amongst others, the BVI, the Cayman Islands, Hong Kong, Luxembourg, Singapore and the USA. Until its collapse sometime in late 2022, the Babel Group was engaged in the business of cryptocurrency lending and cryptocurrency asset management under the brand name “Babel Finance”.
[6] Prior to co-founding BHL with Wang Li, Yang Zhou had incorporated a company named Moonalpha Financial Service Limited (“Moonalpha”) in Hong Kong on 23 October 2015. At its inception, Yang Zhou held 50% of the shares of Moonalpha, though it subsequently became a wholly owned subsidiary of one “Moonalpha Holding Limited”, a company incorporated in the BVI. Moonalpha is in the cryptocurrency lending business and operates under the “Babel Finance” brand name, even though it is not (and never was) owned by BHL (or any of its subsidiaries). At Yang Zhou’s invitation, BHL was subsequently established in March 2019 by Yang Zhou, Wang Li, and three of their friends (Mi Xiaoping, Zhao Jiahong (“Zhao”) and Shen Lei) for the purpose of “expanding” upon the cryptocurrency business of Moonalpha to provide a wider range of financial services.
[7] Yang Zhou was a director of BHL from its inception on 26 March 2019 until he resigned on 17 June 2022. Wang Li was also a director of BHL from 6 March 2020 until he was removed on 28 December 2022. There were three other positions in BHL’s board of directors which had been occupied by the following individuals:
(a) Gu Tao, who was appointed on 6 March 2020 and resigned on 23 October 2020. He was appointed as a nominee director to represent the interests of a group of investors in a fundraising round conducted by BHL pursuant to an investor’s rights agreement dated 6 March 2020.
(b) Yuan Chen, who was appointed on 27 May 2021 and resigned on 10 June 2022. She was appointed as a nominee director to represent the interests of a group of investors in a fundraising round conducted by BHL pursuant to an investor rights agreement dated 27 May 2021.
(c) Zhao, who was appointed on 23 October 2020. He resigned on 17 June 2022.
[8] Between May 2021 and May 2023, Yang Zhou, Wang Li, Mi Xiaoping, Zhao and Shen Lei held 82.72% of the shares in BHL through a company named “Babel” which had been incorporated in the Cayman Islands on 4 January 2021. The shares in Babel were in turn held by the parties’ respective corporate vehicles which they individually owned and controlled. For example, an entity named “ADP10 Limited”, the shares of which are wholly owned by Wang Li, owns 34.02% of the shares in Babel. Similarly, an entity named “Quantum Speed Limited”, the shares of which are wholly owned by Yang Zhou, owns 45.36% of the shares in Babel. The remainder of the shares in Babel were held by Mi Xiaoping’s, Zhao’s and Shen Lei’s wholly owned corporate vehicles – Roe Deer Limited (5.15%), Spiritual X Limited (10.31%) and SEVENBIT Limited (5.15%) respectively. The 17.28% of the remaining shares in BHL were held by its other “strategic and financial investors”.
[9] The third defendant, Babel Asia Asset Management Private Limited (“BAAMPL”) is a company incorporated in Singapore on 29 July 2021. BAAMPL is a wholly owned subsidiary of BHL that had been incorporated for the purpose of providing cryptocurrency asset management services to the Babel Group’s Singapore-based customers. Yu Shanshan was BAAMPL’s CEO from July 2021 to June 2022. BAAMPL’s board of directors comprised of the following individuals:
(a) Wang Li was a director from 29 July 2021 to 18 January 2022 and from 21 June 2022 to 28 December 2022.
(b) Yang Zhou was a director from 29 July 2021 to 18 January 2022. He was re-appointed as director on 29 December 2022.
(c) Guan Bowen, Yu Shanshan and Wu Ruihong were directors from 8 April 2022 to 21 June 2022.
The operations of the Babel Group
[10] From the time of BHL’s incorporation on 26 March 2019 until sometime in September 2021, Yang Zhou and Wang Li had joint oversight over “the strategic direction and future plans” of the Babel Group. During this period, Yang Zhou served as the Chief Executive Officer (“CEO”) and a director of BHL concurrently. On the other hand, Wang Li served as a “co-founder” and a director of BHL. Both parties acted as “co-CEOs” of BHL during this period, as they would often act jointly in making decisions pertaining to its management.
[11] In October 2021, Yang Zhou decided to exit from the management of BHL and the wider Babel Group. It was envisaged that he would resign from his position as CEO and assume the role of a research consultant who would independently explore business opportunities in Decentralized Finance (DeFi), non-fungible tokens and the metaverse for the Babel Group. Wang Li, on the other hand, would take up the position of CEO in Yang Zhou’s stead and be “fully responsible for [BHL’s] business decisions in the future”.
[12] In tandem with these proposed changes to BHL’s management, Wang Li and Yang Zhou also agreed to effect an adjustment to the equity structure of BHL. To elaborate, as of 1 October 2021, Wang Li and Yang Zhou controlled 23.92% and 31.89% of the shareholding of BHL respectively. It was contemplated that Yang Zhou would transfer 25% of his shareholding in BHL to Wang Li, such that Yang Zhou and Wang Li would control 6.89% and 48.92% of the shares of BHL respectively. These adjustments in the equity and management structure of BHL were intended to improve “the decision-making efficiency” in BHL which had allegedly been hindered by the differences that started to emerge between Yang Zhou and Wang Li in their management of BHL. These contemplated changes are recorded in a letter circulated to BHL’s board of directors and investors on 1 October 2021 by Yang Zhou and Wang Li (“Oct 2021 Letter”).
[13] Consistent with the contents of the Oct 2021 Letter, on 6 December 2021, BHL’s board of directors unanimously resolved to: (a) accept and approve Yang Zhou’s resignation as BHL’s CEO; and (b) appoint Wang Li as the new CEO of BHL who would be “in charge of and fully responsible for the business and operation decision-making” of the Babel Group. Quite apart from his position as CEO, Wang Li also had the right to appoint four of BHL’s five directors. If Wang Li appointed fewer than four directors to BHL’s board and its remaining seats remained vacant, he would be entitled to exercise the number of votes equal to the number of vacant directors in addition to his own vote as director. As such, with Yang Zhou out of the picture, Wang Li controlled BHL’s board of directors and became “the main, if not sole, decision-maker” for the Babel Group’s businesses and operations.
[14] The contemplated transfer of 25% of BHL’s shareholding from Yang Zhou to Wang Li, however, was never completed. Though the parties had entered into a share purchase agreement for Yang Zhou to transfer the BHL shares he controlled to Wang Li, Yang Zhou was advised to await regulatory approval for the transfer of his shares to Wang Li from the Hong Kong Securities & Future Commission (“HKSFC”) as there was a Hong Kong subsidiary in the Babel Group that was regulated by the HKSFC. As such, there was no adjustment to Wang Li’s and Yang Zhou’s shareholding in BHL, which remained in the proportions of 23.92% and 31.89% respectively.
[15] As the CEO of BHL, Wang Li focused on: (a) chartering the strategic direction of the Babel Group, including its budget and its annual and seasonal business plans; (b) planning the growth of the Babel Group, including fundraising; and (c) managing relations with investors and key customers who invested significant amounts of assets with the Babel Group. Owing to the wide-ranging nature and substantial amounts of business that the Babel Group conducted, however, Wang Li delegated the actual running of the day-to-day business and operations of the Babel Group to its employees. These employees were, in turn, pooled across the Babel Group, with the employees of one entity often undertaking work for other entities in the Babel Group.
[16] The key departments in the Babel Group involved in its cryptocurrency lending and asset management business were:
(a) The “Global Partnerships” department, which was responsible for business development (including client acquisition and client relations) as well as the marketing of the Babel Group’s products. This department was headed by Liu Yulong (“Liu”) who was BAAMPL’s employee. Jiang Yuchen (“Jiang”), who was also BAAMPL’s employee, worked directly under Liu in the Global Partnerships department.
(b) The “Investment and Transactions” department, also known as the “Trading” department, which was responsible for the structuring of certain floating rate investment products and the execution of trades to generate profits. This department was headed by one Wang Wenliang.
(c) The “Financial Services” department, also known as the “Lending” department, which was responsible for the structuring of certain lending and fixed rate investment products and the execution of contracts and trades for the purposes of those products.
(d) The “Financial Management” department, which was responsible for the management of the Babel Group’s cryptocurrency wallets and the transfers made to (or out of) them to its various customers and exchange platforms the Babel Group conducted its businesses on. This department was headed by Zhao who, as noted at [7(c)] above, was also a director of BHL.
(e) The “Legal and Compliance” department, which was responsible for the contracts and other forms of legal documentation employed in the course of the Babel Group’s operations. This department was headed by one Lionel Zhao.
The Babel Group’s cryptocurrency asset management business
[17] The Babel Group’s business comprised of two core aspects. First, a cryptocurrency lending business, which involved the grant of both secured and unsecured lending of cryptocurrencies to borrowers in return for interest. Second, a cryptocurrency asset management business, where cryptocurrency assets deposited by customers with the Babel Group would be traded on an exchange or over-the-counter (“OTC”) pursuant to specific investment strategies devised by the Babel Group. It is this latter aspect of the Babel Group’s business which has given rise to the present dispute.
[18] As part of its asset management business, the Babel Group would develop and launch investment products to prospective customers. The process would begin by the Trading department of the Babel Group devising and/or conceptualising new investment products to be marketed. Thereafter, the Trading department would pitch the said product to the Financial Management and Global Partnerships departments, which would in turn assess its viability and market interest. If the Financial Management and Global Partnerships departments determined the proposed investment product to be viable, it would be launched and marketed to potential customers. The Global Partnerships department would then prepare the marketing materials for the investment product and market it to potential customers. The Legal and Compliance department, on the other hand, would prepare and vet the contents of the contracts and legal documentations that were used by the Babel Group to govern their legal relationships with its customers.
[19] According to Wang Li, there was no practice or procedure within the Babel Group for the employees in the Global Partnerships and Trading departments to seek the approval of BHL’s and/or BAAMPL’s management before launching any new investment products or using any marketing materials to promote them.
[20] The Babel Group utilised Moonalpha’s accounts on a cryptocurrency trading platform named “Deribit” to trade and/or invest the assets which its customers had deposited with it for the purposes of its asset management business. Deribit is an online platform offering cryptocurrency exchange services that is operated by DRB Panama Inc (“DRB Panama”), a company headquartered in Panama City. At all times material to the present dispute, Moonalpha held a cryptocurrency trading account (“Main Account”) and approximately 28 sub-accounts with Deribit. An unspecified number of those sub-accounts were designated for the specific purpose of depositing cryptocurrencies that had been raised pursuant to specific investment strategies promoted and operated by the Babel Group. For example, the cryptocurrencies of a customer who invested into the “Chen Xin 1 Fund” would be transferred into a designated sub-account held with Deribit for the purposes of trading and investing under the Chen Xin 1 Fund.
[21] As noted at [16(d)] above, it was the Financial Management department of the Babel Group that was responsible for controlling and authorising the outflows and inflows of cryptocurrencies from the Babel Group’s cryptocurrency wallets. On Wang Li’s unchallenged evidence, the cryptocurrencies received by the Babel Group as part of its asset management business would be dealt with according to the following procedure:
(a) After a customer entered into an agreement with a subsidiary in the Babel Group for the management of its cryptocurrencies, a representative of the Babel Group would provide a wallet address, linked to one of the Babel Group’s cold or custodian wallets, for the said customer to transfer his cryptocurrencies to. These wallets operated as “holding wallets” in which the cryptocurrencies transferred by the Babel Group’s customers would be held, before being transferred into a specific sub-account on Deribit to be traded and invested in line with the particular investment programme that the relevant customers had signed up for.
(b) After receiving the customer’s cryptocurrencies in these “holding wallets”, the Trading department of the Babel Group would send a request to the Financial Management department for the cryptocurrencies to be deposited into the relevant sub-account. The Financial Management department would then arrange for the transfer of the customer’s cryptocurrencies to one of the sub-accounts on Deribit to be managed in line with the terms of the customer’s agreement.
Background to the dispute
Parastate’s investment in the Alpha USDT Fund
[22] On 16 March 2022, Chen Jiayi was introduced to Liu and Jiang through one Richard Dai on a group chat on Telegram, an online messaging application. Richard Dai informed Liu that Chen Jiayi was the “founder of Parastate” and was looking for treasury management services for Parastate. Following a telephone call on the same day, during which Liu gave Chen Jiayi an overview of the financial services and products provided by the Babel Group, Liu sent a presentation deck dated January 2022 which set out the financial services and products then provided by the Babel Group under the “Babel Finance” brand name (“Presentation Deck”).
[23] The Presentation Deck stated that the Babel Group provided treasury management solutions that were “tailored to various risk appetite and liquidity needs”. There were three types of such “solutions” marketed, the details of which were elaborated on in the Presentation Deck: (a) “Fixed Income” products; (b) “Structured” products and (c) the “Babel Quant Alpha Fund”. The Presentation Deck also stated that:
(a) The Babel Group is the “[c]lear regional leader of US$7 billion crypto balance sheet with fast growth record”.
(b) The Babel Group is a “prudent financial innovator” with “[f]inancial innovation in credit, asset management and prime brokerage, led by a professional team with successful entrepreneurship experiences”.
(c) The Babel Quant Alpha Fund (i) “primarily uses machine learning to conduct quantitative analysis and identify any arbitrage or mispricing opportunities in crypto spot, future[s] and options markets”; (ii) would provide (or had provided) “resilient performance throughout volatility cycles”; (iii) is the Babel Group’s “flagship quant strategy boasting stable return and minimal drawdown”; (iv) has a “Sharpe Ratio” of 5.08; and (v) would provide a “Hurdle Rate” of “8% APR minimum guaranteed in USDT”.
(d) Investments into the Babel Quant Alpha Fund could be redeemed with no “Redemption Fee” being payable after 90 days. However, any redemptions within 90 days of investment would be subject to a 5% “Redemption Fee”.
A statement “We have your best interest in mind” was also found at the bottom left corner of most of the slides of the Presentation Deck.
[24] The Babel Quant Alpha Fund was a fund that utilised an investment strategy which primarily used “machine learning to conduct quantitative analysis and identify any arbitrage or mispricing opportunities in crypto spot, future[s] and options markets”. The Babel Group would use “quantitative trading strategies to trade its customer’s assets in cryptocurrency spot, options and derivatives to generate profits on those assets”. Simply, the intended strategy of the Babel Quant Alpha Fund was to engage in arbitrage and exploit prices differences in various cryptocurrencies. The Babel Quant Alpha Fund comprised of three sub-funds which employed such a trading strategy: (a) the Babel Alpha USDT Fund, which was denominated in USDT (“Alpha USDT Fund”); (b) the Quant Alpha Fund, denominated in BTC; and (c) the Quant Alpha ETH Fund which was denominated in ETH. USDT, BTC and ETH represent different types of cryptocurrencies known as Tether, Bitcoin and Ether respectively. The Babel Group used one designated sub-account that Moonalpha held with Deribit for the purposes of trading the cryptocurrencies of the customers who had invested into the Babel Quant Alpha Fund in line with its marketed investment strategy (“Alpha Sub-Account”).
[25] Subsequently, sometime at or around 10:11am on 17 March 2022, Liu sent Chen Jiayi a draft copy of a “Cryptocurrency Management Agreement” (“CMA”) which contained a page-long schedule titled “Management Program” (“MP”). The MP, which was in the form of a table, provided details on the Alpha USDT Fund that Parastate would be subscribing to by way of the CMA. The MP stated:
(a) The particular “Management Program” that Parastate would be subscribing to would be the Alpha USDT Fund, with the “Start Date” of the programme stated to be 18 March 2022. This was the day on which trading in the Alpha USDT Fund would begin.
(b) The “Management Asset” that BAAMPL would be managing on behalf of Parastate would be 5m USDT.
(c) The “Return rate” provided on Parastate’s investment into the Alpha USDT Fund was calculated by the “Excess rate”. The Excess rate at any given point of time would be calculated by reference to the difference between the Alpha USDT Fund’s net asset value (“NAV”) and its initial NAV. If the Alpha USDT Fund obtained an Excess rate of 8%, Parastate would be entitled to a return calculated by reference to the following formula: “8% + (Excess rate – 8%)”. On the other hand, if the Alpha USDT achieved an Excess rate of less than or equals to 8%, then Parastate would be entitled to a return “floored at 8%”.
(d) Consistent with the Presentation Deck (see [23(d)] above), Parastate had the right to “withdraw” the 5m USDT from BAAMPL at any time. Withdrawal requests made after a period of “three months” had elapsed from the Start Date would be “supported” without any “charges” payable. By contrast, withdrawal requests made before the requisite lock-up period of three months had elapsed would result in Parastate incurring a one-time charge equivalent to 5% of the Management Asset.
(e) Weekly disclosures as to the performance of Parastate’s investment would be made at 5pm every Friday.
[26] The CMA detailed the terms on which Parastate would be contracting with BAAMPL for its investment of 5m USDT into the Alpha USDT Fund. It contained the following recitals and terms:
(a) Under Recital 1, BAAMPL (defined as “Babel Finance” in the CMA) described itself as being “experienced in tokens, coins, vouchers, digital currencies, crypto-currencies and similar digital assets management, and provides certain Management Programs (each a ‘Management Program’)”.
(b) Under Recital 2, Parastate (defined as “Client” in the CMA) stated that it desired “to accept such Management Program and engage Babel Finance to undertake certain cryptocurrency management activities (‘Management Services’) in respect of the Management Asset… on behalf of and for the benefit of Client”.
(c) Under clause 2.1.4, each party to the CMA represented that neither the CMA nor “any other information provided in writing or electronic format” to each other contained “any information that is untrue, inaccurate or misleading in any material respects”, and that “no information that would cause the information in such documents to be untrue, inaccurate or misleading in any material respect has been omitted”.
(d) Under clause 2.8, Parastate acknowledged that, “as with any cryptocurrency investment, the value of the portfolio can go up and down depending on various risk factors”. As such, BAAMPL would “not be liable for any direct, indirect or consequential loss or damages suffered” by Parastate (or any of its affiliates or related parties) in ten enumerated circumstances, unless caused by BAAMPL’s “intent or gross negligence”. Those circumstances included:
(i) the occurrence of “a liquid or illiquid market, unusual market conditions, forking, abnormal price volatility, and information asymmetry in relation to Management Assets” (clause 2.8.2);
(ii) “any trading suspension or termination by exchanges for whatever reason” (clause 2.8.7); and
(iii) “any other situation where the loss caused is beyond the reasonable control and not caused by intentional acts or omissions” of BAAMPL (clause 2.8.10).
(e) Under clause 2.11, BAAMPL stated that it “shall always endeavor to act in [Parastate’s] best interests as [BAAMPL’s] client”. However, it warned that “circumstances can arise where [BAAMPL] or one of [BAAMPL’s] other clients may have some form of interest in business being transacted for [Parastate]”. If that happened, or BAAMPL became aware that its interests or those of its other clients conflicted with Parastate’s interests, BAAMPL promised to “take appropriate steps to manage the conflict of interests fairly”.
(f) Under clause 3.2, each party had the right to terminate the contract should the other party breach a “material term” of the CMA. To that end, clause 3.3 stated that such termination would be “without prejudice to any claims for damages or other remedies” that the parties may have under the CMA or the general law.
(g) Under clause 5, each party covenanted and agreed to “indemnify and hold harmless” the other party from and against “any and all” indemnifiable losses, in so far as such losses arose out of, or were based upon: (a) “any inaccuracy in or breach of any representation, warranty, covenant, schedule or term sheet” made by a party to the CMA; and (b) the failure of a party to “perform or observe any covenant, schedule, term sheet or other provision to be performed or observed” by a party. If and to the extent that such indemnity was unenforceable “for any reason”, the relevant party undertook to “make the maximum contribution to the payment and satisfaction of such indemnified liabilities permissible” under the general law.
(h) Under clause 6.2, the validity, interpretation and enforcement of the CMA was to be governed by Singapore law.
Additionally, the Babel Group’s slogan “we have your best interest in mind” was affixed to the top-left corner of each page of the CMA.
[27] Sometime at or around 7:42pm on 17 March 2022, the same day on which Chen Jiayi had received the draft copy of the CMA, Chen Jiayi duly signed the CMA on behalf of Parastate. He also caused Parastate to transfer the 5m USDT (then worth approximately US$5m) to a wallet designated in the MP. It is undisputed that this 5m USDT was subsequently transferred onwards to, and kept in, the Alpha Sub-Account to be traded by the Babel Group in line with the trading strategy of the Alpha USDT Fund.
The Babel Group’s trading of cryptocurrency derivative contracts
[28] Quite apart from its cryptocurrency lending and asset management businesses, the Babel Group carried out certain proprietary trading activities (“PTAs”) from the second half of 2019 up until June 2022. The PTAs entailed the Babel Group utilising cash from its profits and capital (raised through equity financing) to trade in cryptocurrency derivative contracts for the purposes of increasing its “net equity” and growing the revenue of the Babel Group to US$1b by 2024. This is to be distinguished from the derivative trading that the Babel Group had also engaged in as part of its management of the Babel Quant Alpha Fund (see [24] above).
[29] Initially, Yang Zhou and Wang Li jointly managed the trading and investment strategies of the PTAs. After Yang Zhou resigned as the CEO of BHL in December 2021, however, Wang Li began managing and deciding on the trading and investment strategies of the PTAs by himself – though the actual trades were executed by himself, Zhao and Wang Wenliang.
[30] The Babel Group’s trading of cryptocurrency derivative contracts took place through the sub-accounts that Moonalpha held on Deribit’s online exchange platform. Whenever Moonalpha entered into a cryptocurrency derivative contract with Deribit, Moonalpha would be required to deposit a certain amount of cryptocurrency into the relevant sub-account that it was purchasing said derivative contract with as collateral (“Initial Margin”). Following that, Moonalpha would have to maintain a minimum amount of cryptocurrency in the relevant sub-account in order to hold its position on the derivative contract that it had purchased (“Maintenance Margin”). Depending on the performance of the derivative contract, Moonalpha would have to deposit more cryptocurrencies as further collateral to avoid triggering the “liquidation” of its positions pursuant to Deribit’s “auto-liquidation” policy. Under this auto-liquidation policy, in order to limit its exposure to its accountholders’ trades, Deribit had the right to automatically and forcibly close out an accountholder’s trading positions in an incremental manner in the event that the Maintenance Margin of a given account exceeded its net asset value. During this process, the accountholder would be logged out of his account and would have no power to stop the liquidation process.
[31] To reduce the risks posed by Deribit’s auto-liquidation policy, Moonalpha entered into a Non-Liquidating Account Agreement with DRB Panama on 18 May 2020 (“1st NLAA”). Under clause 2.1 of the 1st NLAA, Moonalpha could request Deribit to temporarily disable its auto-liquidation policy in relation to a given account or sub-account even when its Maintenance Margin exceeded its net equity (“Non-Liquidation”). Under clause 2.5 of the 1st NLAA, where Deribit agreed to Moonalpha’s request for Non-Liquidation, its account (or sub-account) would be liquidated according to Deribit’s auto-liquidation policy if: (a) its Initial Margin (defined as 130% of the Maintenance Margin) exceeded its net asset value for a consecutive period of longer than two business days and its Maintenance Margin exceeded its net asset value; or (b) its net asset value fell below the Maintenance Margin for a consecutive period of one business day. Deribit, however, reserved the “sole and absolute discretion” as to accept or decline Moonalpha’s request for Non-Liquidation.
[32] The 1st NLAA was expressed to apply only to the Main Account and two sub-accounts held in Moonalpha’s name with Deribit. In a situation where Moonalpha wished to request for Non-Liquidation by Deribit, Moonalpha had to submit a formal request by way of email, specifying the particular account or sub-account it was requesting the Non-Liquidation of.
[33] Subsequently, on 7 August 2020, DRB Panama and Moonalpha entered into another Non-Liquidating Account Agreement (“2nd NLAA”). Save for two key differences, the 2nd NLAA contained terms almost identical to the 1st NLAA. First, clause 2.5 of the 2nd NLAA defined the term “Initial Margin” as 120% of the Maintenance Margin. Apart from this, clause 2.5 of the 2nd NLAA was identical to clause 2.5 of the 1st NLAA. Second, the 2nd NLAA was expressed to be applicable to the Main Account and 13 sub-accounts that were held in Moonalpha’s name with Deribit. As the 2nd NLAA also covered the Main Account and the same two sub-accounts covered by the 1st NLAA, its effect was to effectively supersede and replace the 1st NLAA. On the documentary evidence, therefore, only 13 of Moonalpha’s sub-accounts with Deribit (out of a rough total of 28), as well as its Main Account, were covered by the 1st NLAA and the 2nd NLAA (collectively, the “NLAAs”).
[34] Quite apart from Deribit’s auto-liquidation policy and the NLAAs, it is Wang Li’s evidence that Deribit had a policy of treating an accountholder’s sub-account as “separate” from other sub-accounts, and that each sub-account “could be used to isolate a margin for a particular trade” (“Sub-Account Policy”). As a result of this Sub-Account Policy, Wang Li explained, in a situation where the net asset value of one sub-account fell below the Maintenance Margin, and the accountholder of that sub-account was unable to meet Deribit’s margin call to bring the Maintenance Margin back to the requisite level, Deribit would have a right to liquidate only the assets in that specific sub-account. As such, Wang Li asserted that Deribit would have no right to cross-liquidate and effect a consolidation of positions across multiple sub-accounts in breach of this Sub-Account Policy.
Deribit’s consolidation of Moonalpha’s accounts
[35] Sometime in May 2022, the cryptocurrency market entered into a severe downturn. Owing to various events in the cryptocurrency market which need not be detailed for the purposes of the present dispute, the market prices of cryptocurrencies began to crater, with cryptocurrency hedge funds, lenders and trading houses such as Three Arrows Capital (“3AC”), Voyager Digital and Celsius Network suspending withdrawals for its customers and filing for bankruptcy. This turmoil in the cryptocurrency markets precipitated a series of events which eventually culminated in Deribit consolidating and liquidating all of Moonalpha’s trading positions in its Main Account and its sub-accounts.
[36] These events, which took place between 10 and 16 June 2022, have been documented by way of correspondence exchanged in a Telegram group chat between representatives of the Babel Group and Deribit (“Telegram Group”). The salient parts of the correspondence are set out in the table below:
S/N
Date (Time)
Summary of the messages exchanged
1
[10] June (21:26–21:45)
One “Maarten Sentillia” (“Maarten”), an employee of Deribit, sent a message to the Telegram Group requesting the Babel Group to top up bitcoins (“BTC”) to the “Babel OTC” and the “Yue Xia” sub-accounts. Wang Wenliang, under the alias “Allen Wang”, agreed to do so. It is undisputed that the requisite top-up had been made.
2
[13] June (14:26)
One “Shaun Deribit” (“Shaun”), also an employee of Deribit, made a request on behalf of Deribit for the Babel Group to top up BTC to the Babel OTC sub-account, noting that it had a deficit of 146 BTC. Wang Wenliang, on behalf of the Babel Group, agreed but did not do so.
3
[14] June (00:04–00:24)
Wang Li, pointing to the volatilities in the cryptocurrency markets, requested for 12 more hours to cover the deficit.
4
[14] June (14:43–15:04)
Shaun requested for an update from the Babel Group, noting that 12 hours had passed since Wang Li’s update. Wang Li informed Shaun that he had spoken to one “Luuk”, the Chief Executive Officer of Deribit at the relevant time, to request for more time to “fill the shortages” in its accounts.
5
[14] June (16:37)
Maarten stated that “no efforts [had] been made [in] reducing positions” thus far. He asked whether the Babel Group wished for Deribit to reduce its positions on its behalf.
6
[14] June (17:31–17:32)
Maarten noted that there was a shortfall in three of Moonalpha’s sub-accounts which collectively amounted to approximately 2,500 BTC and 20,000 ETH. All of those three accounts were covered by the 2nd NLAA. Maarten warned that Deribit had the right to liquidate Moonalpha’s positions under the NLAAs if the Maintenance Margin in those sub-accounts were not “brought back to acceptable levels” within the time stipulated therein. Maarten also warned that Deribit would start liquidating Moonalpha’s trading positions if it failed to deposit a minimum of 200 BTC and 2,000 ETH per hour.
7
[14] June (17:42)
Wang Wenliang stated that 200 BTC had been deposited in the Main Account. Maarten acknowledged receipt of the 200 BTC.
8
[14] June (17:46–18:10)
Wang Li acknowledged Maarten’s messages (in S/N 6 above) and requested for “a longer time to react” to the volatilities in the cryptocurrency markets.
Maarten replied that he appreciated the volatile and risky situation in the market. However, he stated that Deribit did not know whether the Babel Group had sufficient liquidity to meet the liabilities arising from Moonalpha’s open trading positions. Deribit was concerned about having to bear the risks of Moonalpha’s positions and had to act accordingly.
Wang Li acknowledged Maarten’s position and stated that the Babel Group would deposit more assets.
9
[14] June (19:37–19:50)
Maarten stated that Deribit had begun liquidating Moonalpha’s positions. Luuk and Maarten stated that Deribit would stop the liquidation if more BTC and ETH were deposited.
10
[14] June (19:59–20:02)
Wang Li requested for 30 minutes to discuss the matter with his team. Shaun informed Wang Li that Deribit had given the Babel Group “a lot of warnings and… leeway” and that it had to “act now” owing to the market situation, the size of Moonalpha’s positions and the duration of which the Maintenance Margins had remained in breach.
11
[14] June (20:11–22:08)
Luuk noted that the Babel Group had 1718 ETH and 2m USDT in a “withdrawal account”. He asked if those assets could be sent over to Deribit. Wang Li replied that it would not be possible for the Babel Group to do so, as those assets did not belong to its “trading company”.
Wang Li made a proposal for Deribit to: (a) “just” liquidate the Babel OTC sub-account to reduce the risk, with the Babel Group “tak[ing] all the los[ses]” (estimated to be around 800 BTC); and (b) return control over the rest of the accounts back to the Babel Group, following which it would make the requisite top-ups in 48 hours “to make the total equity positive”. This proposal was rejected by Maarten.
Wang Li also informed Deribit that the Babel Group could not promise topping up 200 BTC and 2,000 ETH per hour as Deribit had requested.
12
[14] June (22:18–22:22)
Wang Li lamented the fact that Deribit had begun liquidating Moonalpha’s positions less than an hour after the Babel Group had made the deposit of 200 BTC. He stated that Deribit’s actions were “a big hurt”, since the Babel Group (through Moonalpha) had been one of Deribit’s “largest client for 3 years”. Luuk replied that Deribit had no real choice in the matter as no response had been forthcoming from the Babel Group in the face of its repeated requests for proof of funds.
13
[15] June (06:24)
Shaun stated that Deribit planned to “move all the positions from your [sub-accounts] to [the Main Account]”. He asked Moonalpha (and/or the Babel Group) to “[l]et us know if that causes any big issues on your end”.
14
[15] June (17:16)
Shaun stated that Deribit would be moving all of Moonalpha’s positions in its sub-accounts to the Main Account in 45 minutes.
15
[15] June (18:02)
Shaun stated that Deribit would be moving all of Moonalpha’s positions in its sub-accounts to the Main Account.
16
[15] June (18:02–21:21)
Shaun explained that, post-consolidation, Moonalpha’s Main-Account required a top-up of around 400 BTC and around 12,000 ETH to “cover the negative equity and margin”.
17
[16] June (00:01–11:25)
Luuk requested for a call with Wang Li and Yang Zhou to be arranged to “discuss the situation”. Wang Li and Yang Zhou did not respond. Instead, on behalf of Wang Li and “team”, Liu requested that Deribit “keep the situation within this group only” while the Babel Group was working towards a solution.
18
[16] June (18:50–18:53)
John Jansen, a representative of Deribit, asked whether the representatives of the Babel Group had anything to “discuss further” with Deribit. Liu replied that it would be appreciated “if these info are strictly contained to this group” while the Babel Group worked “diligently for a solution”.
[37] It is evident from the correspondence in the Telegram Group that Deribit had begun liquidating the accounts held by Moonalpha on 14 June 2022. Specifically, on 15 June 2022, Deribit transferred all the derivative contracts and the cryptocurrencies deposited by way of margin in every account held by Moonalpha to the Main Account, following which it consolidated Moonalpha’s positions across all its accounts. Deribit eventually liquidated all of Moonalpha’s trading positions a couple of days thereafter, resulting in a total deficit of US$12,533,733 (218.1618 BTC at a price of US$ 21,070.67 per BTC and 7340.5263 ETH at a price of US$ 1,081.20 per ETH) across all its accounts with Deribit. This meant that the Babel Group’s customers’ investments, in so far as they were held by the Babel Group through Moonalpha’s accounts with Deribit, were completely wiped out. Throughout this process, Moonalpha and/or the entities that formed the Babel Group remained locked out of, and was unable to access, its Main Account or any of its sub-accounts.
[38] Subsequently, Moonalpha received a letter dated 29 June 2022 from DRB Panama (“29 June Letter”), where the latter demanded Moonalpha pay a sum of US$12,533,733 to make good the total deficit remaining in its Main Account. In the 29 June Letter, DRB Panama asserted that it was entirely within its rights to liquidate Moonalpha’s Main Account and all of its sub-accounts pursuant to “clause 2.5 of the [2nd NLAA] and our terms of service”.
Parastate’s discovery of the loss of the Management Asset
[39] On 17 June 2022, the Babel Group issued a notice to its customers stating that the cryptocurrency had “seen major fluctuations” and that it was “facing unusual liquidity pressures”. In the same notice, it was stated that the Babel Group would be suspending redemptions and withdrawals of all its financial products for an unspecified period.
[40] Two days later, on 19 June 2022, Chen Jiayi requested, by way of a Telegram message to Liu and Jiang, that the Management Asset be withdrawn. He did not receive a response. As such, on 20 June 2022, Chen Jiayi, on behalf of Parastate, issued a written withdrawal notice to BAAMPL, Yang Zhou, Wang Li and Wang Wenliang, formally requesting the withdrawal of the Management Asset by 24 June 2022, failing which legal action would be taken for breach of the CMA. In that notice, Chen Jiayi asserted Parastate’s contractual right under the CMA to withdraw the Management Asset since the requisite period of three months had elapsed since the commencement date of the MP (see [25(d)] above).
[41] Parastate did not receive a refund of the Management Asset. Instead, at or around 2:30 pm on 20 June 2022, Chen Jiayi was added to a Telegram group chat with Wang Li, Yang Zhou, Liu and Lionel Zhao. At around 8pm on the same day, Chen Jiayi spoke to Wang Li over two telephone calls, which have been transcribed and tendered as evidence to this court. In the first call on 20 June 2022 (“First Call”), Wang Li informed Chen Jiayi of the following:
(a) First, Deribit had liquidated the Main Account and all the sub-accounts. He explained that the reasons for the liquidation were “complex”. Though the Maintenance Margin of three of the sub-accounts had “reached 100%”, Wang Li explained that Deribit would not, in “normal circumstances”, have automatically liquidated its accounts as the Babel Group: (i) was “the biggest client of Deribit”; and (ii) had “rights of non-automatic liquidation”.
(b) Second, Wang Li stated that Deribit had “suddenly contacted” the Babel Group when the value of cryptocurrencies fell and informed it that “we have to up within one hour”. Instead of being given the full one hour, Deribit had begun liquidating the accounts “after about 45 minutes”. At that point, Wang Li explained, the Alpha Sub-Account was “definitely without problem”. However, Deribit had proceeded to consolidate and liquidate all of Moonalpha’s trading positions, causing the Babel Group “massive” losses. Wang Li also informed Chen Jiayi that it was for this reason that the Babel Group had suspended all withdrawals, and that it was working on various solutions to overcome its present liquidity crisis.
[42] In the second call that took place on 20 June 2022 (“Second Call”), Chen Jiayi informed Wang Li that the proposed solutions that the Babel Group was working on were “slow remedies” which were unacceptable to Parastate. Wang Li also stated that the Babel Group was balance sheet insolvent to the tune of approximately of US$400m and requested for more time to come up to deal with its problems. After this, the following exchange took place between Wang Li and Chen Jiayi:
[43] Chen Jiayi then agreed to give Wang Li until 22 June 2022 to provide an update on the return of the Management Asset to Parastate. Again, Wang Li requested that the information he had shared with Chen Jiayi be kept “confidential” because it would “not [be] good for this information to spread”, to which Chen Jiayi agreed.
Events following the commencement of OC 130
[44] The Babel Group did not return the Management Asset (or repay a sum equivalent to the value of the Management Asset) to Parastate. Accordingly, on 13 July 2022, Parastate commenced OC 130 against Wang Li, Yang Zhou, BAAMPL and BHL. On the same day, Parastate filed HC/SUM 2564/2022, seeking a worldwide freezing injunction against Wang Li for the sum of US$5m. Andre Maniam J granted the injunction on 28 November 2022 following an inter partes hearing on the same day, though limited to a quantum of US$2.5m instead of the US$5m sought by Parastate (Parastate Labs Inc v Wang Li [2023] SGHC 153 (“Parastate (Mareva)”) at [10]). Dissatisfied with the learned judge’s decision not to injunct the full US$5m sought, Parastate filed an appeal against the decision in Parastate (Mareva). On 23 September 2023, the Court of Appeal (“CA”) allowed Parastate’s appeal against Maniam J’s decision and ordered, amongst other things, that the injunction granted against Wang Li be extended to cover assets of up to US$5m (Parastate Labs Inc v Wang Li [2023] 2 SLR 376 at [33]).
[45] Further, on 30 September 2022, BAAMPL filed HC/SUM 3639/2022, seeking an order that OC 130 be stayed as between Parastate and BAAMPL pursuant to s 6 of the International Arbitration Act 1994 (2020 Rev Ed) on the basis that clause 6.3 of the CMA contained an arbitration agreement. The stay was granted by Maniam J on 28 November 2023 (see Parastate Labs Inc v Wang Li [2023] SGHC 48 (“Parastate (Stay)”) at [1]). On the same day, Maniam J ordered that OC 130 be stayed in its entirety on a case management basis pending the resolution of the putative arbitration between Parastate and BAAMPL pursuant to Wang Li’s application in HC/SUM 3651/2022 (Parastate (Stay) at [2]).
The Babel Group’s scheme of arrangement
[46] Following Deribit’s liquidation of Moonalpha’s positions and the Babel Group’s suspension of withdrawals, the Babel Group decided to embark on a restructuring of its debts and liabilities to its creditors and customers. Sometime in August 2022, the Babel Group distributed an “initial restructuring plan” to creditors who signed non-disclosure agreements. Subsequently, on 6 March 2023, BHL, BAAMPL, Moonalpha and two other wholly-owned subsidiaries of the Babel Group (Babel Block Limited and Shinar Trading Services Private Limited) applied, individually, for moratoria protection for a period of six months under s 64 of the Insolvency, Restructuring and Dissolution Act 2018 (2020 Rev Ed) (“IRDA”) by way of HC/OA 192/2023, HC/OA 193/2023, HC/OA 194/2023, HC/OA 195/2023 and HC/OA 196/2023. Aidan Xu J granted the applications on 17 April 2023, with the moratoria relief ordered to apply until 21 June 2023 (Re Babel Holding Ltd [2024] 4 SLR 1087 (“Babel (Convening Order)”) at [2]). On 26 June 2023, Maniam J ordered that the case management stay in respect of Wang Li and Yang Zhou be lifted with effect from 22 July 2023 in light of the grant of those moratoria orders.
[47] Subsequently, on 17 July 2023, Xu J granted the five entities’ applications for an extension of the moratoria orders until 15 September 2023 (Babel (Convening Order) at [3]; see Re Babel Holding Ltd [2023] 5 SLR 900). On the same day, Xu J also granted Wang Li’s and Yang Zhou’s applications in HC/SUM 2092/2023 and HC/SUM 2093/2023 for OC 130 to be stayed on case management grounds until the expiry of the extended moratoria orders (15 September 2023) (“CMS”). On 13 September 2023, Xu J ordered for the CMS to be extended co-extensively with the moratoria orders granted in favour of the five entities in the Babel Group (“Extended CMS”). Parastate did not object to Xu J’s grant of the Extended CMS.
[48] The moratoria applications were based on a proposed scheme of arrangement that the Babel Group had proposed to its creditors sometime in August 2022 (“Scheme”) (see Babel (Convening Order) at [4]). The terms of the Scheme envisioned the use of a deed poll structure that would combine the claims against all the companies in the Babel Group into a single scheme to be compromised together (see Babel (Convening Order) at [4(a)]). Further, the scheme creditors could elect between two types of consideration in exchange for releasing the companies in the Babel Group from all scheme claims. The first type of consideration took the form of tokens called the “Babel Recovery Coin” (“BRC”), which entitled a scheme creditor the right to redeem a pro rata share of a sinking fund established by the Babel Group for the purposes of the Scheme. The second type of consideration took the form of an option to subscribe for contingent value rights (“CVRs”) in HOPE Maintenance Centre (“HOPE”), a newly established investment holding company in the Cayman Islands. A scheme creditor who elected for CVRs would acquire “economic rights broadly equivalent” to shares in HOPE. The details of the scheme were elaborated on in the explanatory statement (“ES”) and a supplementary explanatory statement (“SES”) issued by BHL to its creditors under s 211(1) of the Companies Act 1967 (2020 Rev Ed) (“CA”) on 18 September 2023 and 9 December 2023 respectively.
[49] On 20 September 2023, Xu J granted BHL permission under s 210(1) of the Companies Act 1967 (2020 Rev Ed) to convene a meeting of a single class of creditors on or before 17 December 2023 for the purposes of considering and, if thought fit, approving (with or without modifications) the proposed Scheme (see generally, Xu J’s decision in Babel (Convening Order)). On the same day, Xu J also ordered a further extension of the extended moratoria orders until three weeks after the scheme meeting is held.
[50] On 1 December 2023, Xu J granted Parastate’s application in HC/SUM 3190/2023 for the case management stay extended on 15 September 2023 to be lifted, on the basis that the Scheme “contemplate[d] no nexus with [Wang Li]”. Based on a perusal of the notes of evidence of the hearing of HC/SUM 3190/2023 on 1 December 2023, it was clear that the learned judge was relying on the fact that BHL (and the scheme manager) had expressly rejected the possibility of granting a third-party release to Wang Li under the terms of the Scheme. Given that the terms of the Scheme would have had no impact on the right of Parastate to proceed against Wang Li (see also, in this regard, Babel (Convening Order) at [20]), the learned judge saw it appropriate to lift the case management stay of OC 130.
[51] On 17 December 2023, BHL convened the scheme meeting with 46 scheme creditors present and voting. 37 creditors representing 80.43% in number and 90.15% in value voted in favour of the Scheme, thereby meeting the requisite statutory majority for a scheme of arrangement to become binding on a company and its creditors under ss 210(3AA) and 210(3AB) of the CA. Parastate voted against the Scheme in view of its conclusion that the Scheme would not permit it to recover the full value of its lost Management Asset.
[52] On 22 January 2024, Xu J heard and granted BHL’s application in HC/SUM 47/2024 for the Scheme to be sanctioned by the court so as for it to become binding on the Babel Group and all Scheme creditors. Being bound by the terms of the Scheme as a scheme creditor, Parastate:
(a) elected to receive BRCs as consideration under the Scheme for its admitted scheme claim amount of US$5m by way of an election form submitted to the scheme manager on 28 February 2024.
(b) discontinued OC 130 against BAAMPL and BHL on 18 March 2025 as they were parties to the Scheme, the terms of which required that Parastate’s claims against BAAMPL and BHL in OC 130 be discontinued.
(c) discontinued OC 130 against Yang Zhou on 16 January 2025, who has a third-party release under the Scheme.
Procedural history
[53] On 3 November 2025, Parastate filed HC/SUM 3226/2025, where it sought an order to attend court be issued under O 15 r 4 of the Rules of Court 2021 (“ROC”) to one Tan Wei Cheong (“Tam”), the scheme manager of the Scheme, compelling him to give oral evidence on the ES and the SES. Concurrently, Parastate also sought an order for Tam’s affidavit of evidence-in-chief (“AEIC”) to be dispensed with under O 15 r 16(2) of the ROC. Parastate had, by this application, sought to question Tam about the PTAs undertaken by the Babel Group and the positions taken in relation to them in the ES and the SES. Parastate was of the view that the oral evidence elicited from Tam in relation to such matters would assist it in proving Parastate’s assertions that the Babel Group’s collapse had been caused by PTAs, and the losses incurred therefrom had led to the wiping out of the Management Assets.
[54] On 17 November 2025, I dismissed the application with brief oral grounds on the basis that Tam was not in a position to provide evidence that would have been of assistance to the present proceedings. Specifically, I was of the view that Tam did not have personal knowledge of the specific allegations pertaining to the PTAs which Parastate intended to rely on for the purposes of the present proceedings, given: (a) that the ES and the SES had been prepared by BHL and finalised before Tam’s appointment; (b) the existence of specific disclaimers in the ES stating that BHL’s Scheme advisers had not verified the accuracy or the completeness of its contents; and (c) the specific position taken by Tam on affidavit that he has no personal knowledge of the allegations advanced by Parastate in OC 130, which pertained to events which had occurred before his appointment as scheme manager.
The parties’ cases
[55] In OC 130, Parastate has advanced claims against Wang Li for dishonestly assisting “Babel Finance” in its alleged breaches of trust and/or fiduciary duties. Parastate has also claimed against “Babel Finance” for making various fraudulent misrepresentations in the Presentation Deck and the CMA, and seeks to pierce “Babel Finance’s” corporate veil to hold Wang Li personally liable for those misrepresentations. Lastly, Parastate has also claimed against all of the defendants in unlawful means conspiracy for allegedly combining together to defraud, and/or make fraudulent misrepresentations to, Parastate.
[56] I note that, following the discontinuance of its claims against Yang Zhou, BAAMPL and BHL, Parastate appears to be only pursuing its claim in dishonest assistance against Wang Li. Parastate has not made any legal submissions on its claims in fraudulent misrepresentation and unlawful means conspiracy. The only live cause of action in these proceedings, therefore, is whether Wang Li is liable to Parastate for dishonestly assisting the alleged breaches of trust and/or fiduciary duties by BAAMPL or BHL.
Parastate’s case
[57] I start with Parastate’s claim against Wang Li for dishonest assistance. Parastate began by arguing that BAAMPL and/or BHL held the Management Assets for it on an express trust. Though Parastate’s pleaded case appeared to be that the purported trust entailed BAAMPL and/or BHL holding only the Management Assets on trust for Parastate (only), it took the position in its closing submissions that BAAMPL and/or BHL held the entirety of the invested assets in the Alpha USDT Fund (approximately US$50m) on trust for all of its subscribers (approximately 16).
[58] Following this, Parastate argues that the subject matter and the objects of the purported trust were certain – there were 16 investors investing US$50m in the Alpha USDT Fund held in the Alpha Sub-Account, with each investor being entitled to “a proportionate co-ownership” of that US$50m. Parastate also argues that there was a clear intention for BAAMPL and/or BHL to hold the US$50m for the 16 investors on trust. In doing so, it relies on, among others, the grounds that: (a) Recital 2 of the CMA provided that the Management Assets were to be managed by BAAMPL “on behalf of” and “for the benefit” of Parastate; (b) the investors’ assets were segregated in the Alpha Sub-Account; (c) BAAMPL and/or BHL would provide weekly disclosures and updates to those investors in relation to the status of the Alpha USDT Fund; and (d) clause 2.11 of the CMA provided that BAAMPL would “always endeavour” to act in Parastate’s best interests as its client.
[59] In addition, or alternative, to its case that BAAMPL and/or BHL held the Management Assets for it on an express trust, Parastate also submits that BAAMPL and/or BHL owed it fiduciary duties in respect of its management of the Management Assets. BAAMPL and/or BHL had, firstly, made “an undertaking of responsibility” to Parastate, as evidenced by the fact that BAAMPL and/or BHL had: (a) held themselves out as being experienced in asset management; (b) undertaken to manage the Management Assets “on behalf of” and “for the benefit of” Parastate in Recital 2 of the CMA; and (c) promised to always endeavour to act in Parastate’s best interests and resolve conflicts of interests fairly in clause 2.11 of the CMA. Parastate further points to how BAAMPL and/or BHL had “full” and “absolute discretion” in relation to the management of the Alpha USDT Fund (within the confines of its mandate), and how investors had “no say or influence” over how such management would be carried out. Parastate was therefore vulnerable, especially given that the CMA had not been the subject of any negotiation. Owing to these facts, Parastate submits that BAAMPL and/or BHL owed it fiduciary duties to, amongst others: (a) act in the best interests of Parastate; (b) act in good faith and honestly in respect of the Management Assets; and (c) “properly safeguard the Management Assets and to ensure that it is only used for the purposes of investing in the [Alpha] USDT Fund”.
[60] Next, Parastate argues that BAAMPL and/or BHL had breached its duties qua fiduciary and/or trustee by “failing to take steps to stop Deribit from consolidating the sub-accounts with the Main Account and to safeguard the Management Asset”. By failing to so act, Parastate argues that the Management Assets had “in fact” been used to “pay down the losses [BAAMPL and/or BHL] had suffered (and which it owed to Deribit) as a result of the PTAs that Wang Li carried out”. Parastate submits that, when Deribit had asked in the Telegram Group whether consolidating all of Moonalpha’s sub-accounts with its Main Account would cause “any issues” on the Babel Group’s end, BAAMPL and BHL were obliged by virtue of their fiduciary duties to “speak up and to tell Deribit that the assets in the Alpha Sub-Account belonged to the investors of the Alpha USDT Fund and are not assets of Babel Finance”. In failing to do so, Parastate submits that BAAMPL and/or BHL had been in breach of its duties to: (a) act in good faith and honestly in relation to the Management Assets; and (b) safeguard the Management Assets.
[61] Additionally, Parastate also appears to be arguing that BAAMPL and/or BHL had breached its duty to act in good faith and honestly in respect of the Management Assets (as well as to properly safeguard them) by using them to: (a) finance, underwrite and/or guarantee its own and/or its other client’s investment positions; and/or (b) to obtain additional margin quantum for its own and/or its other clients’ investments. According to Parastate, the Management Assets had been “used as collateral” for the PTAs conducted by the Babel Group, when BAAMPL and/or BHL were under a duty to ensure that the Management Assets were used “solely for the purposes of the Alpha USDT Fund”. Though it is unclear, Parastate appears to be arguing that, had BAAMPL and/or BHL duly discharged its duties, Deribit would not have used the Management Assets to pay down the losses suffered on the PTAs.
[62] Turning to the element of assistance, Parastate asserts that Wang Li’s inaction in failing to respond to Deribit’s messages in the Telegram Groupbetween 14 and 15 June 2022 amounted to him assisting the abovementioned breaches of BAAMPL’s and/or BHL’s fiduciary and/or trustee duties. At that point, Wang Li knew that Deribit had been continuously requesting the Babel Group to bring the Maintenance Margins for the three sub-accounts back to acceptable levels, as well as the fact that its customers’ assets were at risk. Parastate argues that Wang Li had “a duty to speak in those circumstances” and that its failure to do so “procured, facilitated, caused and/or led to [BAAMPL’s and/or BHL’s] breach of trust and/or fiduciary duties”.
[63] Finally, Parastate submits that Wang Li’s alleged assistance of BAAMPL’s and/or BHL’s breaches of trust and/or fiduciary duties was dishonest. It has marshalled the following evidence in support. First, Wang Li knew that BAAMPL and/or BHL would benefit from the consolidation and the cross-liquidation of the sub-accounts and the Main Account “through a reduction of [BAAMPL’s and/or BHL’s] debts owed to Deribit”. Second, Liu’s request (on behalf of the Babel Group) to Deribit requesting it to “strictly contain” the information in the Telegram Group allegedly showed Wang Li’s “desire to keep the truth under cover as long as possible” (see [36], S/Ns 17 and 18). Third, Wang Li knew that the Alpha Sub-Account “did not belong” to BAAMPL and/or BHL and was not to be used for any unauthorised purposes. Fourth, Wang Li had failed to inform Chen Jiayi, during the two calls that took place on 20 June 2022, that: (a) the reason why BAAMPL and/or BHL had to top up the Maintenance Margins on its sub-accounts was because they had suffered massive losses in the PTAs; (b) it was untrue that Deribit had “suddenly contacted” BAAMPL and/or BHL before liquidating its accounts; and (c) Deribit had asked Wang Li whether it would cause “any issues” if it were to effect a consolidation of all the sub-accounts with the Main Account.
Wang Li’s case
[64] Wang Li denies every aspect of Parastate’s claim in dishonest assistance. Wang Li’s first argument is that Parastate has, since its opening statement, been attempting to advance a new case on dishonest assistance from that which has been pleaded in its SOC. According to Wang Li, Parastate’s pleaded case in its SOC was that BAAMPL and/or BHL had been in breach of its trustee and/or fiduciary duties by using the Management Assets for the unauthorised purposes of: (a) financing, underwriting and/or guaranteeing its own and/or its other clients’ investments; and (b) obtaining additional margin quantum for its own and/or its other clients’ investments. The assistance that is alleged to have been rendered by Wang Li was that he had caused, procured, and/or directed BAAMPL and/or BHL to enter into PTAs using: (a) “funds and/or assets of which the Management Assets formed part of”; and/or (b) the Management Assets as collateral (“Pleaded Case”).
[65] By contrast, in Parastate’s opening statement dated 25 November 2025 (which had been filed a week before trial), Parastate allegedly took the position that BAAMPL and/or BHL had breached its trustee and/or fiduciary duties by “allowing Deribit to collateralise and use the Management Assets to cover the losses incurred by [BAAMPL’s and/or BHL’s] trades” or the trades of its other clients. The assistance that Wang Li is alleged to have rendered in this regard was his “substantive inaction” in “not preventing, objecting and/or taking any remedial steps to stop Deribit’s actions”, which had in turn caused the Management Assets to be used to reduce BAAMPL’s and/or BHL’s losses in other accounts which had deficits in their Maintenance Margin (“Unpleaded Case”). Wang Li argues that this Unpleaded Case is “clearly substantially and fundamentally different” from the Pleaded Case, and that Parastate should not be permitted to pursue it at this stage of the proceedings.
[66] Turning next to the questions as to whether BAAMPL and/or BHL were constituted as the express trustees or fiduciaries of the assets in the Alpha Sub-Account, Wang Li began by arguing that the only legal relationship that Parastate had with the Babel Group was that with BAAMPL. He argued that, therefore, the only entity in the Babel Group that could have been constituted as a trustee or fiduciary vis-à-vis Parastate was BAAMPL.
[67] Following this, Wang Li argues that Parastate’s case that BAAMPL was a trustee of the assets in the Alpha USDT Fund is entirely without merit. First, he argues that there was no evidence, or a lack of clarity, as to: (a) the amount of cryptocurrency held in the Alpha Sub-Account; (b) the contribution of each investor of the Alpha USDT Fund; and (c) precisely who the 16 investors of the Alpha USDT Fund were. Therefore, he argues, the subject matter and objects of the purported trust were uncertain. Second, Wang Li also argued that there was no clear intention for BAAMPL to have held the assets in the Alpha USDT Fund on an express trust for the investors. He argued that the CMA and the MP, which governed the legal relationship between Parastate and BAAMPL, are “bereft of any language alluding to a trust structure”. In addition, Wang Li pointed to the finding of Xu J in Babel (Convening Order) that the Management Assets were not held on trust for Parastate (at [18]–[19]). As Parastate had subsequently withdrawn its appeal (CA/CA 33/2023) against the learned judge’s decision in Babel (Convening Order), Wang Li argues that Parastate “must therefore be taken to have accepted all the findings” therein.
[68] Wang Li also denies the existence of any fiduciary relationship between BAAMPL and Parastate. First, he submits that Parastate and BAAMPL were commercial parties dealing with each other at arm’s length, and that it is inappropriate to have expected BAAMPL to subordinate its interests to Parastate’s. Second, Wang Li points out that Parastate was “a seasoned player in the cryptocurrency industry” who was “more than capable of advancing and protecting its own interests”. Third, Wang Li argues that the terms of the CMA militated against the finding of a fiduciary relationship between BAAMPL and Parastate. Specifically, he argues that clause 2.11 of the CMA made it plain that the parties had not intended for BAAMPL to be subject to the fiduciary duties to act in the best interests of Parastate and to avoid positions of conflicts of interests. Fourth, Wang Li argues that Parastate was not vulnerable as the discretion that BAAMPL had over the management of the Management Assets was “limited” by the confines of the MP and the CMA.
[69] In relation to the alleged breaches of trustee and/or fiduciary duties by BAAMPL, Wang Li has segmented his submissions based on what he terms the “Pleaded Case” and the “Unpleaded Case” (see [64]–[65] above). Wang Li has made two main arguments in relation to the Pleaded Case. First, Wang Li submits that Parastate has “not provided a shred of evidence whatsoever to back up its allegations”. To the extent that Parastate is relying on the ES and SES to prove that BAAMPL and/or BHL had used the Management Assets as collateral for the PTAs (or exposed them to the risks of the PTAs), Wang Li argues that they are inadmissible hearsay evidence as their makers had not been called to give evidence. Second, there is “clear evidence” showing that: (a) BAAMPL and/or BHL had not used the Management Assets (or any portion thereof) in relation to the PTAs; and (b) the Management Assets had not been exposed to the risks of the PTAs. Said evidence took the form of: (a) how the PTAs had not been conducted with the Management Assets; (b) how the Management Assets had been deposited into the Alpha Sub-Account; and (c) the existence of the Sub-Account Policy.
[70] In relation to the Unpleaded Case, Wang Li argues that there was no breach of any trustee/fiduciary duties on the part of BAAMPL as they had taken clear steps to ensure that the sub-accounts were not consolidated and liquidated. Additionally, Wang Li argues that Parastate has adduced no evidence to show that Deribit would not have liquidated the Alpha Sub-Account even if Wang Li, BAAMPL had spoken up and informed Deribit that the assets in the Alpha Sub-Account belonged to its clients. Given that there was no breach of any trustee/fiduciary duties by BAAMPL, Wang Li submits that he did not, and could not have, assisted in any such breach.
[71] Lastly, Wang Li submits that Parastate has failed to show that he had acted dishonestly during the relevant course of events. First, Parastate has not pleaded any allegation or particulars of dishonesty on the part of Wang Li. Second, Wang Li did not have any knowledge of the underlying facts and circumstances giving rise to BAAMPL’s trust or fiduciary obligations. This was because, until 20 June 2022, Wang Li had not even known that Parastate was a customer of BAAMPL (or the Babel Group), nor about the details of the Alpha USDT Fund. Third, Wang Li asserts that his inaction, in the circumstances, did not offend “ordinary standards of honesty”.
Issues to be determined
[72] It is not disputed by the parties that a claimant bringing a claim in dishonest assistance must show: (a) the existence of a trust or fiduciary obligation; (b) a breach of a trust or fiduciary obligation; (c) assistance rendered by the defendant towards the breach; and (d) that the assistance rendered was dishonest (Miao Weiguo v Tendcare Medical Group Holdings Pte Ltd [2022] 1 SLR 884 (“Tendcare Medical”) at [45]; see also George Raymond Zage III v Ho Chi Kwong [2010] 2 SLR 589 (“George Raymond”) at [20]).
[73] Accordingly, the broad issues that arise in this case are:
(a) first, whether BAAMPL and/or BHL held the assets in the Alpha Sub-Account on an express trust for the subscribers of the Alpha USDT Fund;
(b) second, whether BAAMPL and/or BHL was in a fiduciary relationship with Parastate in respect of the Management Assets, and if so, what fiduciary duties were owed;
(c) third, whether BAAMPL and/or BHL had breached its duties as trustee and/or fiduciary;
(d) fourth, whether Wang Li had rendered assistance to BAAMPL’s and/or BHL’s breach(es) of its duties as trustee and/or fiduciary; and

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An investor's claims against a group founder were dismissed in full

Laws this judgment relies on

Grounds of decision

Introduction

Facts

The parties

The operations of the Babel Group

The Babel Group’s cryptocurrency asset management business

Background to the dispute

Parastate’s investment in the Alpha USDT Fund

The Babel Group’s trading of cryptocurrency derivative contracts

Deribit’s consolidation of Moonalpha’s accounts

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Date (Time)

Summary of the messages exchanged

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Parastate’s discovery of the loss of the Management Asset

Events following the commencement of OC 130

The Babel Group’s scheme of arrangement

Procedural history

The parties’ cases

Parastate’s case

Wang Li’s case

Issues to be determined