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On 8 March 2023, the Grand Court docket of the Cayman Islands appointed Joint Provisional Liquidators (“JPLs”) over Atom Holdings (the “Firm”), a Cayman integrated holding firm for the Atom Group, which operated a cryptocurrency trade by way of a web based platform referred to as AAX (Atom Asset Alternate).
In line with an AAX August 2022 press launch, AAX had a spot buying and selling quantity of USD$57.2 million in July 2022 and boasted over 3 million customers in over 160 nations. Nevertheless, in November 2022 (shortly after the crypto trade FTX filed for chapter in america), AAX abruptly ceased operations and didn’t course of hundreds of excellent buyer withdrawal requests. The administrators and administration of the Firm resigned or in any other case ceased to speak with clients and the web platform was now not accessible.
On 6 March 2023, numerous retail clients of AAX (the “Petitioners”) petitioned the Cayman Islands Court docket for the winding up of the Firm on the premise that it was unable to pay its money owed and likewise that it was simply and equitable for the Firm to be wound up. The Petitioners additionally utilized for the pressing appointment of JPLs over the Firm for the aim of defending and preserving the Firm’s belongings pending the willpower of the winding up petition.
On 8 March 2023, the Court docket appointed JPLs over the Firm with the next powers, amongst others:
- to take any steps of their discretion for the safety and preservation of the Firm’s belongings and to stop the dissipation or misuse of the Firm’s belongings and people of its subsidiaries;
- to analyze and report on the affairs of the Firm and its subsidiaries inside and out of doors of the Cayman Islands, together with in Seychelles, Singapore, Hong Kong, and Malta;
- to establish and take possession of the belongings of the Firm;
- to look at people on oath or in any other case if the JPLs take into account it expedient for the aim of defending the Firm’s belongings;
- to take management of subsidiaries of the Firm and to handle the affairs of such subsidiaries; and
- to take steps essential to freeze or protect property held by any particular person towards which the Firm has a declare and the place there’s a danger of dissipation.
Remark
The Court docket’s appointment of JPLs on this matter demonstrates that the Cayman Islands Court docket continues to be adept at coping with functions for the preservation of belongings on an pressing foundation. The appointment of provisional liquidators in such circumstances stays a key software for the prevention of additional dissipation or misuse of an organization’s belongings and supplies scope for a radical investigation into the affairs of the corporate.
The appointment of JPLs additionally presents scope for recognition of the Cayman appointed officeholders in different jurisdictions. Cayman Islands provisional liquidations have beforehand been accepted as “overseas proceedings” underneath Chapter 15 of the US Chapter Code and elsewhere as a matter of personal worldwide regulation. The JPLs of the Firm on this case have, the truth is, just lately sought Chapter 15 recognition in america Chapter Court docket within the Southern District of Florida.
With the so-called “crypto winter” being not fairly over, it stays to be seen whether or not the Cayman Court docket can be confronted with comparable functions in respect of different digital asset exchanges or crypto-related companies within the coming months (for a round-up of authorized instruments out there in crypto-related disputes extra usually see our abstract here). Within the meantime, litigants can relaxation assured that the Court docket has as soon as once more demonstrated its means to successfully tackle pressing functions for the preservation of belongings pending the willpower of winding up proceedings.
Conyers have efficiently obtained comparable reduction in lots of different circumstances earlier than the Cayman Islands courts and have additionally assisted with acquiring recognition in a number of jurisdictions on behalf of officeholders.
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