Babel Finance lost $766M to risky trades — then asked the court for time

Babel Finance, a Hong Kong crypto lender, hit a liquidity crunch when the crypto market convulsed in June 2022, and suspended redemptions and withdrawals on 17 June 2022, saying the pause was needed to stabilise its position and protect creditors. The hole underneath measured US$766 million — US$524 million lost in risky trading by co-founder Wang Li, and another US$224 million lost when lenders liquidated the firm's loan collateral.

The first restructuring plan went to creditors in August 2022 and was revised after feedback. On 6 March 2023, Babel Holding Limited and related companies applied to the General Division of the High Court of Singapore for a moratorium under the Insolvency, Restructuring and Dissolution Act — protection to let the restructuring come to fruition through a scheme of arrangement. Houlihan Lokey advised on the plan, with binding commitments for new money targeted by May 2023 and a scheme filing targeted for June.

The recapitalisation was to come partly from the founder himself, back in a leadership role, and repayment was to run through a new crypto-backed stablecoin named Hope, collateralised with bitcoin and ether. The lender that had frozen its own creditors' money in June 2022 was asking a Singapore court, nine months later, for the legal right to pay them back its own way.