{"investigation":{"slug":"babel-finance","entity_name":"Babel Finance","trust_score":5,"severity_base":null,"score_modifier":0,"confidence":0.92,"status":"published","content_type":"investigation","summary":"Babel Finance was a Hong Kong-based crypto lending and asset management firm that raised $80 million at a $2 billion valuation in May 2022, only to suspend all withdrawals the following month citing 'unusual liquidity pressures.' Internal restructuring documents later revealed that co-founder Wang Li had directed the firm's proprietary trading desk using customer funds with no risk controls, resulting in losses ultimately totaling $766 million and triggering insolvency proceedings in Singapore.","sections":[{"content":"","heading":"Company Overview and Growth","sources":[{"url":"https://www.coindesk.com/business/2022/05/25/crypto-lender-babel-finance-lands-unicorn-status-after-80m-series-b","name":"Crypto Lender Babel Finance Lands Unicorn Status After $80M Series B — CoinDesk","type":"news_article","credibility":2},{"url":"https://www.prnewswire.com/news-releases/babel-finance-closes-us80-million-series-b-fundraising-round-at-us2-billion-valuation-301554729.html","name":"Babel Finance closes US$80 million Series B fundraising round at US$2 billion valuation — PR Newswire","type":"official","credibility":1},{"url":"https://techcrunch.com/2022/05/25/crypto-asset-management-babel-2-billion-valuation/","name":"Crypto asset manager Babel Finance reaches $2B valuation — TechCrunch","type":"news_article","credibility":1}],"severity":"low"},{"content":"","heading":"Withdrawal Suspension and Initial Insolvency Disclosure","sources":[{"url":"https://www.coindesk.com/business/2022/06/17/babel-finance-suspends-withdrawals-citing-unusual-liquidity-pressures","name":"Babel Finance Suspends Withdrawals, Citing 'Unusual Liquidity Pressures' — CoinDesk","type":"news_article","credibility":2},{"url":"https://fortune.com/2022/06/17/crypto-lender-babel-finance-suspends-withdrawals-market/","name":"Crypto lender Babel Finance suspends withdrawals, citing 'unusual liquidity pressures' — Fortune","type":"news_article","credibility":1}],"severity":"critical"},{"content":"","heading":"Proprietary Trading Losses and Internal Control Failures","sources":[{"url":"https://www.theblock.co/post/160230/babel-finance-crypto-lost-280-million-proprietary-trading-restructuring","name":"Babel Finance lost over $280 million in proprietary trading with customer funds — The Block","type":"news_article","credibility":2},{"url":"https://www.coindesk.com/business/2022/07/29/babel-finance-lost-280m-trading-customer-funds-report","name":"Lender Babel Finance Lost $280M Trading Customer Funds: Report — CoinDesk","type":"news_article","credibility":2},{"url":"https://www.bloomberg.com/news/articles/2022-07-29/troubled-crypto-lender-babel-lost-big-while-trading-client-funds","name":"Troubled Crypto Lender Babel Finance Lost Big While Trading Client Funds — Bloomberg","type":"news_article","credibility":1},{"url":"https://www.investing.com/analysis/babel-lost-8000-btc-and-56000-eth-while-trading-customer-funds-200627812","name":"Babel Lost 8,000 BTC and 56,000 ETH While Trading Customer Funds — Investing.com","type":"news_article","credibility":2},{"url":"https://fintechnews.sg/70299/hong-kong/babel-finance-files-for-moratorium-works-on-new-stablecoin-to-repay-us766m-loss/","name":"Babel Finance Files for Moratorium, Works on New Stablecoin to Repay US$766M Loss — Fintech Singapore","type":"news_article","credibility":2}],"severity":"critical"},{"content":"","heading":"Creditor Exposure — Zipmex and Others","sources":[{"url":"https://www.coindesk.com/markets/2022/07/21/zipmex-confirms-loans-worth-53m-to-babel-and-celsius","name":"Zipmex Confirms Loans Worth $53M to Babel and Celsius — CoinDesk","type":"news_article","credibility":2},{"url":"https://cryptopotato.com/zipmex-resumes-withdrawals-discloses-53m-exposure-to-babel-and-celsius/","name":"Zipmex Resumes Withdrawals, Discloses $53M Exposure to Babel and Celsius — CryptoPotato","type":"news_article","credibility":2},{"url":"https://www.blockhead.co/2023/04/19/babel-begins-in-court-restructuring-creditor-protection-extended/","name":"Babel Begins In-Court Restructuring, Creditor Protection Extended — Blockhead","type":"news_article","credibility":2},{"url":"https://www.thejakartapost.com/business/2022/07/31/crypto-platform-zipmex-files-for-bankruptcy-protection-in-singapore.html","name":"Crypto platform Zipmex files for bankruptcy protection in Singapore — The Jakarta Post","type":"news_article","credibility":2}],"severity":"high"},{"content":"","heading":"Restructuring Proceedings and Adviser Engagement","sources":[{"url":"https://www.coindesk.com/business/2022/07/01/troubled-crypto-lender-babel-finance-looking-to-hire-restructuring-specialist-houlihan-lokey-sources","name":"Troubled Crypto Lender Babel Finance Looking to Hire Restructuring Specialist Houlihan Lokey — CoinDesk","type":"news_article","credibility":2},{"url":"https://news.bloomberglaw.com/bankruptcy-law/babel-finance-taps-restructuring-adviser-amid-liquidity-crunch","name":"Babel Finance Taps Restructuring Adviser Amid Liquidity Crunch — Bloomberg Law","type":"news_article","credibility":1},{"url":"https://www.prnewswire.com/news-releases/babel-finance-files-moratorium-application-in-singapore-high-court-301763460.html","name":"Babel Finance Files Moratorium Application in Singapore High Court — PR Newswire","type":"official","credibility":1},{"url":"https://www.blockhead.co/2023/04/19/babel-begins-in-court-restructuring-creditor-protection-extended/","name":"Babel Begins In-Court Restructuring, Creditor Protection Extended — Blockhead","type":"news_article","credibility":2}],"severity":"high"},{"content":"","heading":"Recovery Coin Proposal and HOPE Stablecoin","sources":[{"url":"https://www.bloomberg.com/news/articles/2023-03-05/babel-finance-envisions-defi-coin-at-center-of-restructuring-after-huge-loss","name":"Babel Pitches 'Recovery Coin' to Repay Creditors After $766 Million Loss — Bloomberg","type":"news_article","credibility":1},{"url":"https://decrypt.co/122778/babel-finance-mulls-new-token-launch-repay-creditors","name":"Babel Finance Mulls New Token Launch to Repay Creditors — Decrypt","type":"news_article","credibility":2},{"url":"https://techcrunch.com/2023/03/13/babel-flex-yang-stablecoin/","name":"Founder of troubled crypto asset unicorn Babel launches new DeFi project, stablecoin — TechCrunch","type":"news_article","credibility":1},{"url":"https://www.fxstreet.com/cryptocurrencies/news/heres-how-babel-finance-plans-to-repay-766-million-to-creditors-through-stablecoin-recovery-coin-202303060621","name":"Here's how Babel Finance plans to repay $766 million to creditors through stablecoin 'Recovery Coin' — FXStreet","type":"news_article","credibility":2}],"severity":"high"},{"content":"","heading":"Broader Market Context and Contagion","sources":[{"url":"https://www.blockhead.co/2022/06/20/singapore-based-crypto-lender-babel-finance-on-verge-of-collapse/","name":"Singapore Based Crypto Lender Babel Finance on Verge of Collapse — Blockhead","type":"news_article","credibility":2},{"url":"https://fortune.com/2022/07/29/crypto-lender-babel-reportedly-lost-280-million-trading-with-customer-funds/","name":"Struggling crypto lender Babel reportedly lost $280 million trading with customer funds — Fortune","type":"news_article","credibility":1},{"url":"https://gizmodo.com/babel-crypto-bitcoin-1849349060","name":"Crumbling Tower of 'Babel' Traded $280 Million of Users' Crypto, Lost It All — Gizmodo","type":"news_article","credibility":2}],"severity":"high"}],"timeline":[{"date":"2018","event":"Babel Finance founded in Hong Kong as a crypto lending and financial services firm.","source":"TechCrunch","source_url":"https://techcrunch.com/2022/05/25/crypto-asset-management-babel-2-billion-valuation/","date_original":"2018-01-01"},{"date":"2022-05-25","event":"Babel Finance announces completion of $80 million Series B funding round at a $2 billion valuation, achieving unicorn status. Investors include Jeneration Capital, 10T Holdings, Dragonfly Capital, BAI Capital, and Circle Ventures.","source":"CoinDesk","source_url":"https://www.coindesk.com/business/2022/05/25/crypto-lender-babel-finance-lands-unicorn-status-after-80m-series-b"},{"date":"2022-06-17","event":"Babel Finance suspends all product redemptions and withdrawals, informing partners the company is insolvent and citing 'unusual liquidity pressures.'","source":"CoinDesk","source_url":"https://www.coindesk.com/business/2022/06/17/babel-finance-suspends-withdrawals-citing-unusual-liquidity-pressures"},{"date":"2022-06-30","event":"Bitcoin falls from approximately $30,000 to $20,000 during June 2022, triggering forced liquidations of Babel's unhedged proprietary trading positions. Approximately 8,000 BTC and 56,000 ETH are lost.","source":"The Block","source_url":"https://www.theblock.co/post/160230/babel-finance-crypto-lost-280-million-proprietary-trading-restructuring"},{"date":"2022-07","event":"Babel Finance reported to be engaging restructuring specialist Houlihan Lokey as financial adviser.","source":"CoinDesk","source_url":"https://www.coindesk.com/business/2022/07/01/troubled-crypto-lender-babel-finance-looking-to-hire-restructuring-specialist-houlihan-lokey-sources","date_original":"2022-07-01"},{"date":"2022-07-20","event":"Zipmex halts withdrawals on its own platform after disclosing $48 million exposure to Babel Finance and $5 million exposure to Celsius Network.","source":"CoinDesk","source_url":"https://www.coindesk.com/markets/2022/07/21/zipmex-confirms-loans-worth-53m-to-babel-and-celsius"},{"date":"2022-07-29","event":"Babel Finance's restructuring proposal deck, dated July 2022, is reported on by Bloomberg and The Block, revealing that the firm lost over $280 million (approximately 8,000 BTC and 56,000 ETH) through proprietary trading of customer funds with no risk controls.","source":"Bloomberg","source_url":"https://www.bloomberg.com/news/articles/2022-07-29/troubled-crypto-lender-babel-lost-big-while-trading-client-funds"},{"date":"2022-07-31","event":"Zipmex files for creditor protection in Singapore following the Babel Finance default.","source":"The Jakarta Post","source_url":"https://www.thejakartapost.com/business/2022/07/31/crypto-platform-zipmex-files-for-bankruptcy-protection-in-singapore.html"},{"date":"2022-12","event":"Co-founder Wang Li removed from Babel Finance leadership. Company states that risky trading activities appear to have been instructed solely by Wang Li.","source":"Fintech Singapore","source_url":"https://fintechnews.sg/70299/hong-kong/babel-finance-files-for-moratorium-works-on-new-stablecoin-to-repay-us766m-loss/","date_original":"2022-12-01"},{"date":"2023-03-05","event":"Bloomberg reports Babel Finance is proposing a 'Recovery Coin' DeFi mechanism as the centerpiece of its restructuring plan to address $766 million in total creditor losses.","source":"Bloomberg","source_url":"https://www.bloomberg.com/news/articles/2023-03-05/babel-finance-envisions-defi-coin-at-center-of-restructuring-after-huge-loss"},{"date":"2023-03-06","event":"Babel Finance files a moratorium application in the General Division of the High Court of Singapore under Section 64 of the Insolvency, Restructuring and Dissolution Act.","source":"PR Newswire (official filing announcement)","source_url":"https://www.prnewswire.com/news-releases/babel-finance-files-moratorium-application-in-singapore-high-court-301763460.html"},{"date":"2023-04-19","event":"Singapore court extends Babel Finance's creditor protection and the firm begins formal in-court restructuring proceedings.","source":"Blockhead","source_url":"https://www.blockhead.co/2023/04/19/babel-begins-in-court-restructuring-creditor-protection-extended/"},{"date":"2023-07-21","event":"Babel Finance's Singapore creditor protection period extended to July 21, 2023, as the firm continues restructuring negotiations.","source":"Fintech Singapore","source_url":"https://fintechnews.sg/70299/hong-kong/babel-finance-files-for-moratorium-works-on-new-stablecoin-to-repay-us766m-loss/"}],"sources_used":[{"url":"https://www.coindesk.com/business/2022/06/17/babel-finance-suspends-withdrawals-citing-unusual-liquidity-pressures","name":"Babel Finance Suspends Withdrawals, Citing 'Unusual Liquidity Pressures' — 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