Written by Richard Wee, Fatin Ismail and Tai Sher Lynn

The case involves an application for winding up of the Hodlnaut Pte Ltd (“the Company”) presented by the plaintiffs. The main issue is whether cryptocurrency funds held by the company from various creditors should count as “debts” under the Singaporean Insolvency, Restructuring and Dissolution Act

The Company is a cryptocurrency trading platform for the public that had lost 69% of the cryptocurrencies deposited by the user on its platform. Prior to this, the Company had been placed in interim judicial management; in HC/OA 451/2022 on 24 April 2023. At that time, the court had directed the interim judicial managers to proceed to present a winding up petition, with concurrent application to discharge, and that the interim judicial management was to continue in the meantime. One of the directors had subsequently filed an application for a three month moratorium pursuant to s 210(1) of the Companies Act 1967, on the premise of a proposal set out in an indicative non-binding term sheet (“the OPNX Offer”). Following the hearing on 7th August 2023, the court had expressed concern over the directors’ conduct in relation to the OPNX Offer and the last-minute filing of HC/OA 792/2023. The directors were ordered to file affidavits to explain their course of conduct. Nevertheless, the winding-up application was adjourned for the interim judicial managers to consider the new OPNX Offer. Finally, the winding up application was proceeded with at the hearing of 16 October 2023, in the face of opposition by two of the directors of the Company.

Summary of Submissions by the Parties

The interim judicial manager argued that the Company should be wound up as the requirements under the law have been met: the Company is unable to pay its debts and when they fall due having regard to its current assets and current liabilities, and the various statutory provisions are fulfilled. The directors argued that the court in its discretion should exercise the favour of allowing the Company to attempt restructuring beforehand. They further argued that cryptocurrency holdings of the Company do not constitute debts within the meaning of the applicable law, and even should the winding up order proceed, the directors sought the appointment of persons other than the interim judicial managers to act as liquidators. The applicable law argued on by the directors are s 125(a) of the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”), where “debts” within the meaning of s 125(2)(c) can only refer actual money, s 2 of the Payment Services Act 2019 in respect to the definition of money, and O 22 r 1 of the Rules of Court 2021 where cash debt is not to be treated as “movable property”. It is argued by the directors that following s 125(2)(c) of the IRDA, and “liability” as defined in s 2 of the IRDA, cryptocurrency is not a “money” claim. Furthermore, as there were withdrawal halts on the cryptocurrency as imposed by the Company on creditors, the directors argued that there was in fact no liability owed.


The court in this case granted the application to wind up the Company being satisfied that the requirements under the IRDA have been met. His Lordship was clear in stating that the Company was indeed unable to pay its debts, that an obligation to pay cryptocurrency to its creditors count as debts owed by the Company.  His Lordship expounds on the fact that the test of cash flow insolvency under s 125(2)(c) of the IRDA is a broad one, citing the case of Sun Electric Power Pte Ltd v RCMA Asia Pte Ltd (formerly known as Tong Teik Pte Ltd) [2021] 2 SLR 478 (“Sun Electric”). He provides that the court is to look at the holistic position of the company when considering whether a company is able to pay its debts, including non-monetary assets of the company which may be payable in money, rather than just liquidated claims. The fact that debts are to be defined in money or money’s worth is not a controversial point; a debt arises only when an actual quantification of assets in monetary terms has been determined through concluded court proceedings. It is to the court to assess the holdings of the assets during the winding-up petition. Whether or not the court accepts the valuation put on these by the applicant is dependent on the evidence before it. The fact that the holdings were in cryptocurrency did not affect the outcome, it was merely a particular kind of asset. However, His Lordship surmises that nothing in his decision suggests that cryptocurrency should be treated as money in a general sense. This point is not a decision that he will be deciding on in this present case. The fact that there was a halt on withdrawal does not extinguish liability nor does it postpone the acquiring of liability for the purposes of cash flow insolvency. The court therefore finds that the Company is unable to pay its debt having regard to its current assets and current liabilities. On the matter of whether the judicial managers should be appointed as liquidators, the court finds no reason to doubt the ability or suitability of the judicial managers to function as liquidators. Having considered all evidence provided, the court is also not satisfied that there is likelihood of success in the directors’ proposed restructuring of the Company.


In conclusion, cryptocurrency owed by a company can be deemed as debts owed under the law of insolvency as per the Singaporean High Court.

The full judgment can be accessed here.

Published on 12 March 2024


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