Singapore’s Babel Receives Extension of Creditor Protection as a Crypto Lender

• What – Crypto lending platform Babel has been granted an extended creditor protection period in Singapore after failing to pay back $50 million to its clients. 
• Why – The company has reportedly struggled to meet its financial obligations due to a liquidity crisis. 
• What Next – Babel has been granted an additional 30-day protection period to restructure its business and develop a plan to pay back its clients. 

Babel’s troubles started in January 2022 when it suffered a massive Crypto liquidation event, leading to a loss of funds for its clients. 

The company claimed it was the victim of a cyberattack, but investigations revealed that it was due to its risky trading strategies. Babel’s management team was accused of using client funds to make risky trades, resulting in significant losses.

The creditor protection granted to Babel has been extended multiple times, with the most recent extension being granted on April 20, 2023. 

The company has been struggling to come up with a plan to pay back its clients, and there are concerns that the extended protection period may not be enough to resolve its financial woes. 

The Singapore High Court has appointed a judicial manager to oversee the restructuring of Babel’s business. 

The manager will be responsible for assessing the company’s financial situation, identifying its assets and liabilities, and coming up with a plan to pay back its clients. Babel’s creditors have expressed concerns about the company’s ability to pay back their funds. 

Many of them have been waiting for months to receive their money, and there is growing frustration over the lack of progress in resolving the issue. Some have even threatened legal action against Babel if they do not receive their funds soon. 

The Crypto lending industry has been growing rapidly in recent years, driven by the increasing popularity of cryptocurrencies. However, it has also been plagued by issues such as fraud, insolvency, and regulatory challenges. 

Babel’s case is just one example of the risks associated with investing in the crypto lending market. The regulatory environment for the crypto lending industry is still evolving, with many countries yet to establish clear rules and guidelines for companies operating in the space. 

This has led to a lack of transparency and accountability, making it difficult for investors to know who they are dealing with and what risks they are exposed to. In the case of Babel, there are concerns that the company may have violated Singapore’s regulations governing the operation of moneylending businesses. 

The Monetary Authority of Singapore (MAS) has been investigating the company’s activities and has warned investors about the risks associated with investing in unregulated crypto lending platforms. The MAS has also been exploring the possibility of issuing its own central bank digital currency (CBDC). 

The bank has stated that it could issue a CBDC if the use of stablecoins continues to grow in the country. This could provide a safer alternative to unregulated crypto lending platforms and help protect investors from fraud and insolvency risks. 

In conclusion, Babel’s extended creditor protection period highlights the risks associated with investing in the crypto lending industry. 

The lack of regulatory oversight and transparency in the Crypto market has made it difficult for investors to assess the risks and make informed decisions. 

The case also underscores the need for regulators to establish clear rules and guidelines for companies operating in the space to protect investors and prevent fraud and insolvency. 

The issuance of a CBDC by the MAS could provide a safer alternative for investors looking to invest in cryptocurrencies and avoid the risks associated with unregulated platforms.