Singapore Court clarifies that crypto-debt can form the basis of a winding up petition
In a helpful decision for creditors of distressed crypto-platforms, the Singapore Court has clarified in Aaron Loh Cheng Lee and another v Hodlnaut Pte Ltd that crypto holdings can be amount to debts owed by the debtor company in determining its insolvency.
The Singapore Court distinguished its previous judgment in Algorand Foundation Ltd v Three Arrows Capital PTE Ltd in which the winding up petition was based on a written demand for cryptocurrency itself, as against an actual sum of money. The Singapore Court did not consider it necessary for a creditor to pursue and obtain a judgment in liquidated damages before it could issue a statutory demand for repayment of the underlying debt (assuming it is valued and claimed as a fiat debt).
Whilst in principle, a crypto debt can be used to petition for winding up or bankruptcy in the BVI and the Cayman Islands, there has not yet been any decision on the point. However, if those courts were to look to the Singaporean Court (which would be persuasive but non-binding), they may find that a sum demanded pursuant to a statutory demand under section 155 of the BVI Insolvency Act and section 93(a) of the Cayman Islands Companies Act, which mirrors s125(2)(a) of the Insolvency, Restructuring and Dissolution Act 2018 (being the applicable statutory demand provision in Singapore), would need to be valued and expressed as fiat currency.
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