For insolvency professionals, trustees and investors navigating the murky waters of cryptoasset recovery, recent common law authorities provide an important guide toward legal certainty, particularly for questions of ownership, fiduciary obligation and the treatment of unclaimed or misappropriated tokens.

Against this backdrop, the Singapore High Court's recent decision in Re Genesis Asia Pacific Pte Ltd  (in liquidation), commonly referred to as Re Taylor, is a pivotal moment in the common law's evolving engagement with digital asset ownership.

The decision, which underscores the importance of clarity in custodial arrangements and offers useful guidance on when a trust over cryptoassets may be inferred or implied, is relevant across jurisdictions that regularly deal with digital asset structures, such as the British Virgin Islands, the Cayman Islands and Bermuda. These offshore centres often host the holding companies, token issuers and custodian structures that underpin crypto exchanges or decentralised finance platforms.

The Singapore High Court in Re Taylor  considered whether unclaimed cryptocurrency held by a liquidated exchange could be distributed to customers on the basis that it was held on trust. The joint liquidators of Eqonex Capital Pte Ltd said the assets were either held on express trust (based on the exchange's user agreements) or that a resulting or Quistclose trust could be inferred.

The court applied orthodox trust principles, requiring the "three certainties" of intention, subject matter and objects. Despite the user agreements stating that digital assets "are custodial assets held by the Eqonex Group for your benefit" and that "title … will at all times remain with you," the court found this insufficient to constitute certainty of intent.

The mere fact that assets were segregated and designated for customer use was insufficient to evidence an intent to create a fiduciary relationship. Additionally, the court rejected the existence of resulting or Quistclose trusts due to the absence of a clear purpose or mutual intention. A similar approach was taken by the Hong Kong courts in Re Gatecoin  (in liquidation).

This decision is significant for two reasons. First, it demonstrates that courts are increasingly prepared to apply conventional trust and property principles to blockchain-based assets. Second, it highlights the importance of documentation, platform terms and wallet architecture in determining ownership and fiduciary obligations.

For liquidators and trustees, Re Taylor  offers a roadmap. Where a trust can be clearly identified, recovered digital assets can be distributed back to beneficial owners or, in some cases, to shareholders through established trust mechanisms. Where no trust exists, these assets may instead be applied in satisfaction of the company's general liabilities.

Recovering digital assets during liquidation is often a multi-jurisdictional and multidisciplinary exercise. The process typically begins with asset tracing, including reviews of internal ledgers, blockchain transactions and exchange accounts to identify and secure relevant wallets. In jurisdictions such as Singapore, Hong Kong, the British Virgin Islands, the Cayman Islands and Bermuda, liquidators have powerful tools for summoning former officers, compelling document production and initiating proceedings for non-cooperation.

These powers, however, only go so far. In many instances, access to wallets may depend on seed phrases, keys or multifactor authentication devices retained by former insiders.

Liquidator roles are also made difficult by the practical hurdles that necessarily exist with digital and cryptoassets.

These include:

• Identifying fraudsters who routinely exploit pseudonymous wallets and cross-chain bridges to obscure the trail of stolen assets. In ChainSwap v Persons Unknown, a British Virgin Islands-based protocol provider secured freezing orders over wallets used in a major hack, but the culprits remained unidentified.
• Obtaining clarity as to custody and legal status of the cryptoassets, particularly when they are held in a pooled or omnibus wallet. Without user-specific segregation or detailed internal registers, the chain of beneficial ownership can be irretrievably broken.
• Overcoming difficulty in accessing systems and wallets, particularly where private keys or administration credentials may have been lost or deleted, either maliciously or negligently, rendering wallets inaccessible despite being visible on-chain.

In each of the above instances, liquidators must be experienced in handling cryptoassets. They must also be prepared to engage with forensic and legal specialists to seek recovery or obtain judicial relief for information and visibility in respect of identified assets.

Engagement with former directors, key management and platform operators is often critical and frequently required to obtain access credentials, seed phrases and back-end systems. This process can be time-consuming, especially where there is limited cooperation or where key individuals have departed or are unreachable or are under investigation.

Where management is uncooperative or has absconded, liquidators may be forced to seek urgent relief through ex parte  disclosure orders, freezing injunctions or even search-and-seizure (Anton Piller) orders.

It is a complex and involved area of law that will typically require specific, multi-jurisdictional advice and processes. Once this hurdle is overcome and digital assets are recovered, however, liquidators face a critical second question of how to deal with them. The answer depends on whether the assets are trust property or part of the general estate.

Where a trust relationship is established, assets must be returned to the beneficiaries. This is relatively straightforward if customer identities are known, wallets are segregated and robust know-your-client records exist. When trust obligations are absent or assets are unclaimed, liquidators may consider alternative distribution routes.

In the Cryptopia liquidation in New Zealand, unclaimed cryptoassets were pooled and redistributed to verified claimants through a judicially sanctioned plan. Similar approaches may be adopted elsewhere, particularly where in-specie distributions are impractical.

Unclaimed assets may also be distributed to shareholders via resulting trusts, though this raises questions about entitlement, especially if customer claims remain unresolved. Any such distribution must be done transparently and in accordance with applicable insolvency and trust laws. In most cases, it will require some form of judicial sanction. In some situations, liquidators may be empowered to top up estate assets using recovered crypto before settling creditor claims.

If one lesson emerges consistently from the common law cases, including Re Taylor  and Gatecoin, it is that crypto platforms must define the legal nature of custodial arrangements in precise, legal terms.

To establish a trust over customer assets, the following three certainties must be present:

• Certainty of intention: an explicit declaration that assets are held on trust.
• Certainty of subject matter: identifiable digital assets linked to individual customers.
• Certainty of objects: clearly defined beneficiaries.

Additionally, platform terms and conditions should clarify whether customers retain legal and beneficial title or whether their claims are merely contractual. Ideally, terms should also anticipate insolvency scenarios by explaining how assets will be treated, prioritised or distributed. In best practice scenarios, assets will also be segregated to reflect the trust arrangements. Still, in the absence of that, detailed internal ledgers demonstrating the intention to create a trust and to identify where assets are held for beneficiaries will be sufficient.

Without this clarity, courts will be reluctant to uphold trust claims, potentially exposing customers to unsecured creditor status and diluting recoveries.

The evolving legal treatment of cryptocurrency in liquidation reflects a broader maturation of the digital asset ecosystem. Decisions such as Re Taylor  and Gatecoin  offer important guidance, but they also expose the limits of the trust doctrine in the absence of clear custodial arrangements.

For businesses handling client assets, and for liquidators dealing with unclaimed or recovered crypto, the message is clear: define ownership structures explicitly, anticipate insolvency risk and consider trust-based distribution solutions. As digital assets become increasingly mainstream, traditional legal principles, particularly those governing trusts, will remain central to resolving disputes, recovering value and ensuring equitable stakeholder outcomes.

This article was first published by Thomson Reuters on 15 August 2025.