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A Petitioner’s Dream and a Company’s Nightmare: The Compelling Case for the Winding Up of AAX Crypto Exchange Parent Company, Atom Holdings

Adam Crane


In what appears to be the first liquidation involving a cryptocurrency exchange in the Cayman Islands, Atom Holdings (the “Company”), the Cayman domiciled holding company for the group of entities (the “Atom Group”) operating the now defunct centralised cryptocurrency exchange, Atom Asset Exchange (“AAX Platform” or “AAX”) was ordered to be wound up on 7 July 2023. The Atom Group operated in multiple jurisdictions, with most users appearing to have invested on the AAX Platform through Seychelles domiciled AAX Limited.

AAX offered a full suite of cryptocurrency services to approximately two to three million investors worldwide (including the sale of its native token, the AAB token) and reportedly had a spot trading volume of US$57.2 billion in July 2022 and US$71.1 billion in September 2022.


AAX abruptly shuttered its operations following the now infamous collapse of the high-profile cryptocurrency exchange FTX Trading Ltd (“FTX”) on 11 November 2022. Customers were initially informed that AAX’s website was undergoing regular maintenance and were subsequently told that a systems upgrade was being undertaken. AAX sought to reassure customers that their deposits were not exposed to any risk as a result of FTX’s collapse. However, no further updates were issued to customers after 19 November 2022 and customers have been unable to withdraw any of their deposits to date.

One of the Company’s former directors is alleged to have absconded with the private keys to cryptocurrency wallets holding AAX users’ assets (at least US$30 million but likely more) and two top AAX executives were arrested by Hong Kong law enforcement. Other top executives have reportedly distanced themselves from AAX or cannot be located.

In early March 2023, two retail investors (the “Petitioners”) presented a petition to wind up the Company (the “Petition”) on the basis the Company is insolvent and on just and equitable grounds (based on the need for an investigation and because the Company lost its substratum).

The Petitioners obtained an Order on 8 March 2023 placing the Company into provisional liquidation and appointing Angela Barkhouse (“Ms Barkhouse”) and George Kimberley Leck (“Mr Leck”) of Quantuma (Cayman) Ltd as Joint Provisional Liquidators (“JPLs”) to prevent the dissipation or misuse of assets (including AAX investors’ assets) and to prevent mismanagement or misconduct on the part of the Company’s directors. Media reports following the AAX collapse suggested that there may be millions more of users’ assets held in cryptocurrency wallets, which require further investigation and tracing. Our article on the appointment of the JPLs can be accessed here.

Standing of former directors to make an application on behalf of a Company in insolvency proceedings

The Petition was heard on 7 July 2023 but was subject to a last-minute oral application to adjourn the hearing (the “Adjournment Application”) by the Company purportedly through the residual authority of the Company’s former directors (the “Former Directors”). The Former Directors relied on In Re Union Accident Insurance Co. Ltd1 to assert that the Former Directors had residual powers to instruct solicitors on behalf of the Company and oppose the Petition (notwithstanding that the Former Directors were removed from the Company’s board by the JPLs pursuant to a written resolution dated 16 March 2023). The Court permitted the Former Directors to continue with their Adjournment Application on behalf of the Company and indicated that an order appointing provisional liquidators should not be intended to strip the residual rights from a company’s former directors to oppose a winding up petition on behalf of a company.

Adjournment Application

The Court then dealt with the Former Directors’ Adjournment Application. Counsel for the Former Directors confirmed that they were instructed two days before the hearing but acknowledged in Court that the Former Directors passed a written resolution on behalf of the Company to appoint solicitors as early as 20 June 2023 to defend the Petition. The Former Directors relied on an affidavit sworn by a legal manager employed by their attorneys exhibiting the written resolution but provided no personal direct evidence explaining the reason for the delay or the substance of any possible defence to the Petition itself. The Company’s request for an adjournment was sought to give counsel time to respond to the legal and factual issues raised in the Petition.

The Petitioners argued that the Former Directors had been on notice of these proceedings as early as the 11th, or alternatively, the 18th of May 2023, and that the Former Directors had provided no explanation for waiting until the day of the hearing of the Petition to make an oral application for an adjournment. It was further submitted that the Company and the Atom Group as a whole had ceased operating, that entities within the Atom Group were subject to multiple insolvency proceedings worldwide, and that there was nothing in the business left to be revived due to the collapse of AAX. As such, the Adjournment Application was merely an attempt by the Former Directors to delay the Company’s inevitable winding up.

In the Cayman Islands, the Court has jurisdiction under the Companies Act (2023 Revision) (the “Companies Act”) and the inherent jurisdiction to grant adjournment applications in insolvency proceedings. However, the Court considered that it was most unattractive for the Former Directors to seek an adjournment when they could not postulate the points they wished to take against the Petition itself. Furthermore, the Adjournment Application was made “not just in the 59th minute [of the proceedings] but in the last minute added on for stoppages” and in “the weakest possible way”. The Court refused the Adjournment Application for the following reasons:

  1. The Former Directors had enjoyed a sufficient amount of time to identify a basis upon which to oppose the Company’s winding up;
  2. There was no evidence to suggest that the Petitioners’ debts (as contingent creditors of the Company) would be paid if an adjournment was granted2;
  3. There was no evidence to suggest that where an adjournment was granted, refinancing efforts would be undertaken;
  4. It was alleged that the Company’s former management were involved in a fraud and had obstructed or failed to cooperate with the JPLs;
  5. Although the number of creditor claims were small, the claims themselves accumulated into millions of dollars; and
  6. There was a public interest in investigating the Company’s affairs, which was also supported by virtue of the fact that representatives of the Cayman Islands Monetary Authority (CIMA) attended the hearing.

Winding Up Petition

The Court dealt with the Petition summarily the Petition was unopposed and because the Court was already familiar with the circumstances of the matter from the previous hearing for the appointment of the JPLs. The Court accepted that all the grounds relied upon by the Petitioners to appoint joint official liquidators to the Company were cogently made out. These grounds were as follows:

  1. The Company was unable to pay its debts within the meaning of section 92(d) of the Companies Act on the basis that the Petitioners’ debts, together with the debts of hundreds of thousands of creditors, remain unpaid;
  2. It was just and equitable to appoint official liquidators to the Company because an investigation into the affairs of the Company was required resulting from: (a) the collapse of AAX; and (b) allegations that millions of dollars in users’ assets were misappropriated by the Company’s Former Directors and other executives within the Atom Group; and
  3. It was just and equitable to wind up the Company where the Company lost its substratum, because the AAX Platform ceased operations in 2022 and never resumed trading. Furthermore, insolvency practitioners were appointed to various subsidiaries and it would now be impractical or impossible for the Company, as a holding company, to carry on its business. As mentioned above, a number of top executives of the Atom Group had been arrested and the Former Directors were incognito. As such, they were no longer in a position to operate the Company.

In his closing remarks, Justice Kawaley noted that this case was a “petitioner’s dream and a company’s nightmare” on the basis that there were compelling reasons to wind up the Company. He further remarked that CIMA could present a winding up petition where no qualified petitioner was available to make a petition themselves, it was in the public’s interest to maintain the Cayman Islands’ reputation as a reputable financial centre.

Justice Kawaley delivered a brief oral judgment at the end of the hearing of the Petition on 7 July 2023 winding up the Company. The continued appointment of Ms Barkhouse and Mr Leck (now as joint official liquidators of the Company) and the ensuing investigations will hopefully lead to the recovery and return of assets to the victims of the AAX collapse.

Baker and Partners’ Adam Crane, Nicosia Lawson, and Nia Statham acted for the Petitioners. Baker and Partners are experienced in dealing with digital asset related matters, please contact Adam Crane at for more information.

Authored by: Adam Crane (Partner), Nicosia Lawson (Senior Associate), and Nia Statham (Associate) of Baker & Partners

1 [No. 002025 of 1971].

2 The Former Directors relied on In the Matter of MV Cayman Ltd. (in Official Liquidation) (FSD 8 of 2022 (DDJ)) (Unreported, 28 September 2022) in which Doyle J granted a short adjournment in favour of the winding up petition “At the 59th minute of the eleventh hour”. In that case, credible evidence was presented to suggest that there was a reasonable prospect that the petitioner’s debt would be paid, and steps had been taken to refinance the company.