JOSHUA JAMES TAYLOR & ANOR

Facts

Eqonex Capital Pte Ltd, a subsidiary of Eqonex Limited, ran a digital asset exchange. Customers who accepted its terms and conditions received digital wallets for trading and storing digital assets, which were held by group companies and third-party custodians such as Digivault Limited. On 15 August 2022 Eqonex Limited announced the exchange would close, and customers were given until 14 September 2022 to withdraw. Eqonex Capital went into creditors' voluntary liquidation. Its liquidators, Mr Joshua James Taylor and Ms Chew Ee Ling, took custody of the unclaimed cryptocurrencies, and investigations suggested that moneys in a Standard Chartered bank account had likely been converted from USD Coins. Only 34 of 1,119 unique individuals had responded to the liquidators.

Under s 181 of the Insolvency, Restructuring and Dissolution Act 2018, the liquidators applied in HC/OA 812/2024 for orders that they could treat the assets as held for customers, distribute them under a distribution plan, recover their costs from them, and that anything left on dissolution vest in the Official Receiver under s 213(1). The Official Receiver accepted that leftover bank moneys would vest in it but said no trust existed over the cryptocurrencies, so they would not.

Issues

1. Whether the liquidators could bring the application under s 181 of the IRDA
2. Whether Eqonex Capital held the cryptocurrencies on an express trust for its customers
3. Whether a resulting or Quistclose trust arose over the cryptocurrencies
4. Whether undistributed assets should be ordered to vest in the Official Receiver on dissolution

Holding

The High Court dismissed the application. It held that no trust existed and that the customers held legal and beneficial title to the cryptocurrencies and to the moneys converted from USD Coins, refused the orders on the distribution plan and indemnity, declined to decide vesting under s 213(1) because the company had not been dissolved, and gave liberty to apply for directions if assets remain on dissolution.

Reasoning

On standing, the court allowed the application to be made because resolving the uncertainty, given the differing positions and the low customer response, was of advantage to a liquidation with little else to fund it.

On express trust, the claim failed for lack of certainty of intention, which had to be the customers' as settlors. Clause 4.O called the assets custodial assets held for customers' benefit, but that could equally describe a pledge or lesser control, and it said title remained with the customers. Clause 7.D excluded fiduciary and equitable duties, which cut against any trust. Clauses 4.W(b) and 4.W(c) showed legal title stayed with customers before and after trades, and Clause 8.H's time-limited closing period was inconsistent with ongoing trust obligations. The company's balance-sheet classification and the use of individual wallets did not show the customers' intention, and Bybit Fintech Ltd v Ho Kai Xin and others [2023] 5 SLR 1768 rested on a constructive trust.

On the alternatives, neither situation in Lau Siew Kim v Yeo Guan Chye Terence and another [2008] 2 SLR(R) 108 for a resulting trust applied, and with no express trust there was none to fail. A Quistclose trust was excluded because Clause 8.H let the company sell or transfer remaining assets after the closing period.

On vesting, the cryptocurrencies were neither vested in nor owned by the company, and s 213(1) operates only after dissolution, so a decision was premature. The liquidators should keep trying to return the assets, since the verification and delivery clauses suggested customers may be traceable.

From the judgment