Torque creditors to get interim returns as liquidators end probe

The liquidators of failed cryptocurrency trading platform Torque have concluded their investigations, and creditors can expect a partial return of their crypto assets by the end of the year.

Legal proceedings will be taken against some individuals through the British Virgin Islands (BVI) and Singapore courts as part of the liquidators' planned recovery actions.

In May, Torque's Singaporean founder Bernard Ong was directed by the Singapore High Court to respond to the liquidators' questions.

The liquidators said that depending on his response, they have the option of requiring him to be examined personally in court.

The legal claims would be broadly of the nature of breach of director's duties and claims available under BVI law, the liquidators said in a circular to creditors in June.

When contacted, Mr Ong said he has since responded to the liquidators. "Since day one, I have assisted the liquidators fully in their investigations. I have handed all the accounts to them. I hope everyone can get back as much as possible," said the 34-year-old, who is sole shareholder of the company and also served as director and chief executive.

Torque was registered in the British Virgin Islands in 2019 and operated out of Vietnam.

Last February, Mr Ong made a police report alleging that Torque's chief technology officer Wu Zongyi, also known as Zee, had conducted unauthorised trades resulting in significant losses of investor funds. Mr Ong then applied to the BVI courts to wind up the company.

Mr Wu remains at large and investigations into his personal assets are continuing.

The liquidators from restructuring and insolvency specialist Borrelli Walsh said they did not find any audited financial statements or reliable information from management accounts or any other account held by Torque on any other cryptocurrency exchange.

Instead, they said, they had to work closely with Kroll cyber experts and the IT team of crypto exchange platform Binance to extract transactional information from back-end systems of Binance to reconstruct the financial information, which involved hundreds of millions of lines of transactions.

Around US$300 million (S$419 million) was allegedly misappropriated from Torque. About 3,500 of its 17,700 users in 120 countries are Singaporeans or investors based here with total cryptocurrency assets valued at about US$124 million.

A preliminary review of Torque's record and investor database in March last year estimated creditor claims at US$325 million, while crypto assets under the control of the liquidators were valued at about US$9.1 million.

As at June 13 this year, Torque's crypto assets were estimated at US$3.6 million, or 60 per cent lower than in March last year.

About US$3 million equivalent of crypto assets has since been converted to US dollars, of which US$2.2 million has been paid in relation to the liquidators' fees and expenses including legal and professional fees to date.

The indicative return to creditors is estimated at between 0.1 cent and 0.9 cent for every US dollar. The liquidators said creditors will be able to receive an interim payment by the end of the year.

Several investors who spoke to The Straits Times said they were disappointed with the estimated returns they could potentially get. Many had bought the cryptocurrency with savings meant for their retirement and down payments for homes.

A creditor who wanted to be known only as Mohammed was one of over 100 people who filed a police report against Torque's founder last year.

The 38-year-old postman said he had invested his life savings of $13,000 with Torque and the value of his cryptocurrency appreciated to more than $50,000 before Torque went into liquidation.

"Based on the current value of Bitcoin and the estimated returns, I could probably get back $300. I am not even hopeful about this," he said.

Mr Georgios Baizanis, 47, a private investor based in Cyprus who has US$5.8 million worth of cryptocurrency with Torque, said: "I've never seen such a case where the company handling the liquidation got such a big proportion of the company's liquidated assets."