May 10, 2021

4th Circular to Creditors
Dear Sirs,
Torque Group Holdings Limited (In Liquidation) (“Torque”)
BVI Company Registration Number: 2024611
I refer to the Circular dated 31 March 2021 (“3rd Circular”), in which the Liquidators provided
creditors an update on progress since their appointment and findings from their preliminary
investigations.
Unless otherwise defined herein, capitalised terms used in this circular shall have the same
meanings as those defined in the 3rd Circular.
The purpose of this circular (“4th Circular”) is to provide creditors with an update on the
Liquidators’ progress since the 3rd Circular.
A. Preliminary Report to Creditors
Pursuant to section 226 of the BVI Insolvency Act, 2003, the Liquidators of Torque are required
to prepare a preliminary report to creditors (“Liquidators’ Report”). A copy of the Liquidators’
Report dated 7 May 2021 is enclosed.
The Liquidators emphasise paragraph 47 of the Liquidators Report – the Liquidators
intend to shortly apply to the BVI Court for directions confirming that:
1.

The Liquidators’ assessment of the ownership and legal entitlements is correct andappropriate in respect of cryptocurrency assets transferred by Users in relation to:
1.1. Trading Wallets – these cryptocurrency assets are assets of Torque’s estate, in

liquidation, with Users having corresponding creditor claims against Torque for thecryptocurrency assets that they were otherwise entitled to withdraw from theirrespective Trading Wallet accounts with Torque; andBORRELLI WALSH (BVI) LIMITED
3rd Floor, Commerce House
P.O. Box 3339
Road Town, Tortola VG1110
British Virgin Islands

T +1 284 340 5888

www.borrelliwalsh.com

1.2. Personal Wallets – these cryptocurrency assets are not assets of the Liquidation

estate on the basis that legal and beneficial ownership was never transferred from
Users to Torque;2.

The Liquidators are entitled to convert/realise Torque’s Trading Wallet Crypto Assets
into US Dollars in order to preserve and protect Torque’s assets and in light of the factthat the cryptocurrencies are highly volatile and speculative in nature; and3.

The Liquidators are entitled to reactivate Torque’s Personal Wallet functionality to allow
Users to withdraw these assets (which they have maintained legal and beneficial titlefor). It is unclear to the Liquidators what (if any) Crypto Assets continue to be held byUsers in Personal Wallets, but the Liquidators would like to reinstate this function as aprecaution.

If any creditors do not agree with the Liquidators’ assessment as set out above, they areencouraged to seek legal advice in relation to the Liquidators’ application.
B. Creditor Virtual Town Hall
Pursuant to section 183 of the Act, Liquidators appointed by the Court are not required to calla meeting of creditors unless 10 percent in value of the creditors of the Company give theLiquidators written notice requesting a meeting.
Although a formal meeting is not proposed at this time, the Liquidators hereby convene a
Creditor Virtual Town Hall at 5:00 p.m. Singapore time, on 27 May 2021. A web link to the
Virtual Town Hall will be circulated to all known creditors shortly.
The objective of the Creditor Virtual Town Hall is to provide an update on the liquidation,
present preliminary investigation findings to the extent that they are not commercially sensitive
and to outline next steps.
C. Request for Nominations for Ad Hoc Creditor Committee
The Liquidators hereby request creditor nominations to participate in an informal ad hoc
creditor committee (“Ad Hoc Creditor Committee”) for the Torque Liquidation.
The Ad Hoc Creditor Committee will not have any formal powers, however, will function as aconsultative body whereby members will be provided updates on the Liquidators’
investigations, be consulted with, and their views sought in respect of legal recovery
strategies. Membership on the Ad Hoc Creditor Committee will be an unpaid role and will
require creditors to sign non-disclosure agreements.
If you are a creditor of Torque and wish to nominate yourself as a representative of the Ad
Hoc Creditor Committee, please submit your nomination (“Nomination”) by email to the
Liquidators at torque@borrelliwalsh.com by no later than 5:00 p.m. Singapore time, on
20 May 2021.
For a creditor Nomination to be considered, it must meet the following criteria (“Nomination
Criteria”):
2Subject Line of Nomination Email1. Marked - “Torque Liquidation – Nomination for Ad Hoc Creditor Committee”
Body of Nomination Email2. Full KYC information including (a) first name, (b) last name, (c) date of birth and (d)nationality;
3. Claim value as at the Liquidation Date (18 March 2021) or as close a date aspracticable in original cryptocurrency and US Dollar equivalent;
4. Details of your credentials, experience, skill or profession and an explanation as towhy this will add value to the Ad Hoc Creditors Committee; and5. Full details in respect of any other creditors you represent including full KYC
information (set out at 2 above).
Whilst the Liquidators will endeavour to select members of the Ad Hoc Committee that are
representative of the mix of the full creditor body, they will only likely appoint 5 to 10 members
in total.
Whilst the Liquidators will be guided by the Nomination Criteria, the Liquidators reserve theirrights to accept or reject any creditor Nomination to participate in the Ad Hoc Creditor
Committee at their complete discretion. The Liquidators intend to notify the creditors selected
to be members of the Ad Hoc Creditors Committee at the Virtual Town Hall.
For any urgent customer, creditor and media enquiries, please contact the Liquidators at:
torque@borrelliwalsh.com.
Sincerely,

Jason Kardachi
Joint Liquidator
Torque Group Holdings Limited(In Liquidation)

3

STRICTLY PRIVATE AND CONFIDENTIAL
IN THE MATTER OF THE INSOLVENCY ACT 2003
AND
THE INSOLVENCY RULES 2005
OF
THE VIRGIN ISLANDSAND
IN THE MATTER OF THE LIQUIDATION OFTORQUE GROUP HOLDINGS LIMITED (IN LIQUIDATION)(BVI COMPANY NO. 2024611)

LIQUIDATORS’ PRELIMINARY REPORT TO CREDITORSPURSUANT TO SECTION 226 OF THE ACTDATED 7 MAY 2021

BORRELLI WALSH (BVI) LIMITED
3rd Floor, Commerce House
P.O. Box 3339
Road Town, Tortola VG1110
British Virgin Islands

T +1 284 340 5888

www.borrelliwalsh.com

Content
SectionPage

A.

Appointment of Provisional Liquidators and Liquidators

2

B.

Duty to Report

3

C.

Background and Events Leading to Liquidation

5

D.

Key Activities Undertaken by Liquidators

9

E.

Assets12F.

Creditors

16

G.

Investigations and Potential Legal Claims

19

H.

Creditors Meetings and Virtual Town Hall

21

I.

Contact Details

22

Annexures
1. Notice of Appointment of Provisional Liquidators and Liquidators dated 2 March 2021 and
18 March 2021
2. Liquidators’ three circulars to creditors issued on 3 March 2021, 15 March 2021, and 31
March 2021 (“Creditor Circulars”)
3. Letters to the British Virgin Islands (“BVI”) Registry of Corporate Affairs dated 8 March
2021 and 31 March 2021
4. Advertisements of the Notice of Appointment of Liquidators in the Business Times in
Singapore on 29 March 2021, The BVI Beacon in the BVI on 1 April 2021 and Virgin
Islands Gazette in the BVI on 8 April 2021
5. Police Reports of Mr. Bernard Ong
6. Draft Letter to Creditors - to be issued to Creditors (accompanying this Preliminary Report)
immediately after the Preliminary Report1

A.

Appointment of Provisional Liquidators and Liquidators

1.

On 2 March 2021, Philip Smith of Borrelli Walsh (BVI) Limited, 3rd Floor Commerce
House, P.O. Box 3339, Road Town, Tortola, VG1110, BVI and Jason Kardachi of
Borrelli Walsh Limited, #10-62, 1 Raffles Place Tower 2, Singapore 048616 wereappointed as Joint Provisional Liquidators (together, the “Provisional Liquidators”)
of Torque Group Holdings Limited (the “Company” or “Torque”) pursuant to an orderof the Eastern Caribbean Supreme Court of the BVI dated 2 March 2021.

2.

On 18 March 2021 (“Liquidation Date”), the Joint Provisional Liquidators wereappointed as Joint Liquidators (together, the “Liquidators”) of Torque pursuant to anorder of the Eastern Caribbean Supreme Court of the BVI dated 18 March 2021(“Order”). A copy of the Notice of Appointment of Liquidators (“Notice ofAppointment”) is enclosed at Annexure 1.

2

B.

Duty to Report3.

This preliminary report has been prepared by the Liquidators pursuant to section 226of the BVI Insolvency Act 2003 (“Act”), which requires that the Liquidators provide apreliminary report to creditors within 60 days of their appointment.
Restrictions and Qualifications of the Report

4.

This report:
4.1.

is strictly private and confidential;

4.2.

shall not be reproduced, distributed, or disclosed, in whole or in part, without
the prior written consent of the Liquidators; and4.3.

is prepared by the Liquidators for the purpose of providing a preliminary updateon the work performed since their appointment and their investigation findings
to date.

5.

All amounts referred to are stated in United States Dollars, unless otherwise noted.

6.

This report should be read in conjunction with the Liquidators’ three circulars issued tocreditors of Torque on 3 March 2021, 15 March 2021, and 31 March 2021 which areenclosed at Annexure 2 (“Creditor Circulars”).

7.

In performing their work, the Liquidators have relied upon the integrity and accuracy of
the information and documents supplied. The Liquidators and their staff have, where
possible, attempted to corroborate the information from additional sources. They havenot, however, independently verified all the information and documentation upon which
they relied for the preparation of this report. The Liquidators’ work does not constitutean audit.

8.

This report contains various estimates. These estimates are not guarantees of future
performance and involve risks and uncertainties which are difficult to predict. Actual
events and realisations may differ materially from what are estimated due to a variety
of factors.

9.

The Liquidators report solely on the information available to them at the time of thisreport and will provide additional updates to the creditors as and when they deem
appropriate or as directed by the Court or are required under the Act.
Role and Responsibilities of Liquidators

10.

The duties and responsibilities of the Liquidators are set out in the Act and as provided
in the Order appointing them. The powers available to the Liquidators are set out insection 186 and Schedule 2 of the Act.

3

11.

Under section 186 of the Act, the Liquidators have all the rights and powers to theextent necessary to maintain the value of the assets and to carry out the functions forwhich they were appointed. Additionally, as officers of the court, the Liquidators may
apply to the BVI Court at any time for directions with respect to matters arising in theliquidation.

12.

Under section 178 of the Act, the Liquidators are required to advertise their
appointment in accordance with the Insolvency Rules. Notice has been advertised in
the Business Times in Singapore and the BVI Beacon and the BVI Gazette (Annexure
4).
Sources of Information

13.

This report has been prepared on the bases of the information and documentation
made available to the Liquidators as follows:
13.1.

statutory records and other corporate documents in respect of Torque asprovided by the registered agent of Torque;13.2.

information and documents (physical and electronic) including emails, excel
spreadsheets extracted from the Company’s server and system,
conversations or otherwise, provided by the sole director of Torque, Torquemanagement and representatives of Torque Technologies;

13.3.

information and documentation provided by third parties and advisors,
including creditors, consultants, private investigators, cryptocurrency
analytics / asset tracing experts, cryptocurrency exchanges such as Binanceand other stakeholders;

13.4.

information and documentation provided by the shareholders of Torque or
their connected parties; and13.5.

publicly available information and documentation including information
obtained from BVI company searches.

4

C.

Background and Events Leading to Liquidation
Incorporation

14.

Torque was incorporated in the BVI on 23 October 2019, with an authorised maximumof 50,000 shares, with a par value of $1 each, totaling $50,000.
Share Capital

15.

The Company’s sole shareholder as at the Liquidation Date is set out below:
Shareholder
Bernard Hock FongOng

No. ofsharesConsideration paid

Percentage
shares held

100

100

100%

Director
16.

Pursuant to the Register of Directors of the Company dated 31 October 2019, Mr.
Bernard Hock Fong Ong is the sole director of Torque (“Director”).

17.

On 26 February 2021, the Director filed his first affidavit in support of his originating
application pursuant to paragraphs 159(1)(a), 162(1)(a) and/or (b) and 162(2)(c) of the
Act to appoint joint liquidators over the Company. The Director also filed his first
affidavit in support of an ordinary application to appoint the proposed liquidators as
joint provisional liquidators under subsection 170(1) and paragraphs 170(2)(a) and (d)and 170(4)(a) and (b) of the Act.

18.

On 2 March 2021, Philip Smith and Jason Kardachi were appointed as Provisional
Liquidators of the Company pursuant to an order of the Eastern Caribbean Supreme
Court of the BVI dated 2 March 2021.

19.

On 12 March 2021, the Director filed his second affidavit in support of his application
to irrevocably, by way of Written Resolution, appoint joint liquidators in accordancewith the Court Order dated 2 March 2021.

20.

On 18 March 2021, a further Order was made by the Court to appoint Philip Smith andJason Kardachi as Liquidators of the Company.

21.

The BVI Financial Service Commission (“FSC”) approved Jason Kardachi as anoverseas insolvency practitioner to act as Provisional Liquidator of the Company on
26 March 2021 and as Liquidator on 31 March 2021.

5

Torque Group Structure
22.

23.

Torque is a part of the “Torque Group” which also comprises:
22.1.

Torque Management Ltd., a company incorporated in Malta and wholly owned
by a Singapore citizen (“Torque Malta”). We understand that Torque Malta
has no operations, assets, or liabilities. Torque Malta is therefore not coveredin this report; and21.2

Torque Technologies Company Ltd., a company incorporated in Vietnam andwholly-owned and solely directed by Nguyễn Mạnh Hiếu, an independent
Vietnamese national (“Torque Technologies”). We understand that TorqueTechnologies has no assets, but provided technological and operational
support to Torque. Torque Technologies has no assets or liabilities. TorqueManagement does not have any documentation specifying the terms on which
Torque Technologies provided the technological and operational support toTorque.

For the avoidance of doubt, the appointment of Liquidators of Torque does not extend
to Torque Management or Torque Technologies.
Operations

24.

Torque served as a global online platform for crypto-to-crypto trading and provided its
users (“Users”) with a trading platform and other crypto-related services via a website
and mobile application (“Services”).

25.

All Torque Users were required to register at https://torquebot.net/welcome/register toopen an account with Torque. Torque accepted cryptocurrency asset deposits(“Deposits”) from Users in any of the following seven cryptocurrencies (i) Bitcoin(“BTC”); (ii) Ether (“ETH”); (iii) Tether (“USD₮”); (iv) Litecoin (“LTC”); (v) Bitcoin Cash(“BCH”); (vi) Tron (“TRX”); and (vii) Ripple (“XRP”). Torque Users could make
Deposits into either their Torque Personal Wallet or Trading Wallet (explained further
at paragraphs 26 and 27 below). Torque would not accept Deposits in any othercryptocurrency or fiat currency (e.g. US dollars). Torque does not hold any cash
reserves. The Users’ Deposits are sent from verified, open-market cryptocurrency
exchanges (“Exchange” or “Exchanges”) including, but not limited to, Binance(www.binance.com) or Coinbase.

26.

Deposits into Torque Personal Wallets were hosted on Torque’s website andapplication (“Torque System”), however Users maintained exclusive control ofcryptocurrency assets (“Crypto Assets”) held in their Personal Wallets at all material
times – this was a ‘hosting’ function only.

6

27.

Deposits into Torque Trading Wallets were used by Torque to conduct automatedtrades on Binance to generate profits for its Users. Torque employed two primarytrading strategies:
27.1. “arbitrage”, the simultaneous purchase and sale of the same asset acrossdifferent markets to profit from marginal price differentials; and27.2. “scalping”, the purchase and sale of the same asset within a short timeframe toprofit from small price changes.

28.

Torque held its Trading Wallet Crypto Assets on:
28.1.

37 user accounts with different cryptocurrency Exchanges. The majority of
Torque’s Crypto Assets were held on the Binance Exchange, through a main
trading account (“Main Binance Account”) and a network of over 240 linked
sub-accounts, together (“Torque Trading Accounts”); and28.2.

a Torque laptop with API keys (passwords) which hosted approximately
748,631 cold wallets (“Cold Wallet Laptop”).

29.

Based on Torque’s trading profits, “rewards” were distributed to Torque’s Users on adaily basis in the form of “TORQ Tokens”, a native currency of the Torque System thatwas pegged to Tether (1 TORQ Token = 0.05 USD₮). Users were also entitled toadditional “rewards” for referring new Users to Torque, and for referrals that are in turnmade by these new Users, and so on.

30.

TORQ Tokens in Users’ Personal Wallets could be converted into cryptocurrencies of
the Users’ choice at any time. Similarly, Users could withdraw their Deposits together
with TORQ tokens converted to cryptocurrencies to an external wallet, at any time.

31.

Torque had a decentralized and fluid labour force with its core trading, technology/datamanagement and operations teams working out of Vietnam at the direction of TorqueTechnologies. Torque Technologies outsourced all its staff from a Vietnamese third
party. The Liquidators have been advised there were no contracts in place formalisingarrangements between Torque, Torque Technologies and the Vietnamese third party
providing its outsourced employees.
Cause of Torque’s failure

32.

On or around 9 February 2021, Torque’s former Chief Technology Officer (“CTO”), Mr
Wu Zhongyi (“Zee”), sent the Director a series of text messages on Telegram (“ZeeMessages”), on which he claimed to have made unauthorised leveraged trades which
had resulted in significant trading losses to Torque (“Unauthorised Trades”). On thesame day (9 February 2021), the Director made an announcement to Torque’s Users
on Telegram in respect of the Unauthorised Trades.

33.

As CTO of Torque, Zee was responsible for overseeing Torque’s trading team and had
unrestricted and exclusive access to the Torque Trading Accounts at all material times.
734.

Following receipt of the Zee Messages, Torque Management immediately commenced
an investigation into the trading activities of Zee. Management’s preliminary
investigations revealed that, in addition to the Unauthorised Trades, Zee appeared tohave also misappropriated substantial Crypto Assets (“Misappropriated Assets”)
from Torque (refer to Section G below for further details).

35.

As a result, Torque took immediate steps to suspend all trading activities and began acomprehensive audit of trading logs and all recent transactions.

36.

On 14 February 2021, the Director filed a complaint with the Singapore Police Forceagainst Zee in respect of the Unauthorised Trades and Misappropriated Assets whichis enclosed at Annexure 5.

37.

In the circumstances, the Director determined that Torque was likely insolvent andapplied to the BVI Court for the Liquidators to be appointed in order to investigate,
trace, freeze and recover the Company’s Misappropriated Assets. Pending thatappointment, Joint Provisional Liquidators were appointed by the BVI Court to, among
other things, preserve and protect Torque’s assets pending their appointment asliquidators of Torque,8

D.

Key Activities Undertaken by the Liquidators
Statutory Duties and Obligations

38.

Key activities undertaken by the Liquidators in respect of their statutory duties andobligations included:
38.1.

filing a copy of the Orders via electronic lodgment with the BVI Registry of
Corporate Affairs, pursuant to paragraph 178(1)(b) of the Act (“Registry
Letter”). Copies of the Provisional Liquidator Registry Letter dated 8 March
2021 and Liquidator Registry Letter dated 31 March 2021 are enclosed as
Annexure 3;

38.2.

pursuant to paragraph 178(1)(a) of the Act, advertising the Notice ofAppointment of Liquidators in the Business Times in Singapore on 29 March
2021, the BVI Beacon on 1 April 2021 and Virgin Islands Gazette in the BVI
on 8 April 2021. A copy of the Liquidators’ advertisements are enclosed as
Annexure 4;

38.3.

issuing circulars to all known creditors of Torque on 3 March 2021, 15 March
2021 and 31 March 2021 (“Circulars”). Copies of all Circulars are enclosed
as Annexure 2; and38.4.

requesting that the director of Torque prepare a Statement of Affairs. Whilst
the director of Torque has not yet submitted a SOA to the Liquidators, thesubmission deadline is 18 May 2021 and the Liquidators are liaising with him
in this regard.

Securing Torque’s books and records
39.

Key activities undertaken by the Liquidators to control and secure Torque’s books andrecords included:
39.1.

notifying the registered agent of Torque in respect of the appointment of theLiquidators and requesting copies of all books and records in theirpossession;

39.2.

securing control of all physical books and records in the control of Torque’s
Director and Torque Management;

39.3.

securing and forensically imaging a copy of all of Torque’s available electronic
records in respect of Torque’s back-end customer and trading databases,
emails and all other electronic materials which were all managed on cloudbased servers by Torque Technologies in Vietnam;

39.4.

extracting a full transactional history from Binance in respect of the Torque
Trading Accounts, including all Deposits and Withdrawals (to date, we havebeen unable to extract data in respect of Torque’s trading profitability); and9

39.5.

securing Torque’s Cold Wallet Laptop in Ho Chi Minh, Vietnam, and arranging
for its secure transfer to the Liquidators’ office in Hanoi, where it wasforensically imaged and uploaded for analysis as a part of the Liquidators’
investigations.

Identified and Secured Torque’s Assets
40.

Key activities undertaken by the Liquidators to identify and secure Torque’s assets
included:
40.1.

freezing all Torque user accounts on Torque System (website andapplication);

40.2.

securing control of the Torque Trading Accounts on Binance by changing
login credentials and two-factor identification details;

40.3.

issuing a formal notification letter to Binance advising of the appointment ofProvisional Liquidators and then, subsequently, the Liquidators, requestingthat all Torque Binance Accounts be immediately frozen and various historical
trading information provided;

40.4.

reviewing information provided by Torque stakeholders (creditors, advisors
and others) in respect of the location and nature of Torque’s assets;

40.5.

issuing formal notification letters to all of Torque’s other 29 Crypto Assetaccounts held on the Exchanges requesting both the freezing of assets anddisclosure of information; and40.6.

undertaking property and asset searches in Singapore and the BVI toestablish potential assets of Torque (other than the Crypto Assets).
Management advised that Torque does not own any assets other than Crypto
Assets, but the Liquidators sought to independently verify this. To date, theLiquidators have not established any other ‘undisclosed’ assets of theCompany.

Investigations and legal claims
41.

Key activities undertaken by the Liquidators to investigate the affairs of andcircumstances leading to Torque’s failure included:
41.1.

interviews with Torque Management and Torque Technologies staff in respectof:
41.1.1.

Torque’s flow of funds between Users, the Torque Cold Wallet
Laptop and Binance/other Exchanges; and41.1.2.

Torque’s accounting, trading and asset transfer processes andsystems, including any controls and governance procedures;10

41.2.

42.

reviewing and seeking to reconcile the full transactional record of deposits,
withdrawals and trading profits/losses extracted from:
41.2.1.

Binance in respect of the Torque Trading Accounts – this involves
reviewing in excess of 122,000 deposit/withdrawal transactions andan estimated 4 billion trades;

41.2.2.

Torque System - deposits, withdrawals and trading profits (TORQ
Tokens) attributable to more than 14,000 Users involves anestimated total of 260,000 transactions; and41.2.3.

Torque Cold Wallet Laptop – involves approximately 748,631
unique digital wallet addresses and substantially more transactions;41.3.

engaging cryptocurrency analytics and tracing experts to establish the end
wallet destination of the Misappropriated Assets, which involved various
meetings/calls to explain the source data and review their preliminary findings;

41.4.

engaging legal counsel in the BVI and Singapore to establish a legal strategy
and options available to preserve, protect and locate assets and freeze,
recover and seek disclosure of the Misappropriated Assets from Zee, Binanceand the other Exchanges;

41.5.

engaging and liaising with private investigators in order to locate Zee and/or
any assets he owns, including Crypto Assets and non-crypto assets (e.g.
property, bank accounts etc);

41.6.

reviewing the overall/net position of the Director/Management in respect ofTorque’s Crypto Assets, including their total contributions through Deposits,
profit share received from Torque and withdrawals of Crypto Assets; and41.7.

the Liquidators have filed a further comprehensive complaint against Zee with
the Singapore Police Force (“SPF”) and attended interviews with theinvestigating officer. The Liquidators’ complaint with the SPF is confidential
and cannot be shared with creditors at this stage.

A summary of the Liquidators’ findings from their preliminary investigations is set out
at Section G below.

11

E.

Assets43.

The estimated value of Crypto Assets secured by the Liquidators in Torque’s Trading
Wallet as at 5 May 2021 are summarised below:
Cryptocurrency

Quantity(original)

Quantity(BTC equiv.)

Binance - Spot
XRP
1,805,871.04
50.73
ETH
811.40
49.79
BTC
48.42
48.42
USDT
1,679,456.10
29.24
BNB
2,195.50
24.90
Others
N/A
26.71
Sub-total - Spot
N/A
229.79Binance – Margin
ETH
4.36
0.27
BTC
0.14
0.14
BNB
4.49
0.05
USDT
253.03
0.004
XTZ
0.003
0.0000003
Sub-total N/A
0.46
MarginBinance – Futures
USDT
173,403.43
3.02
BTC
1.39
1.39
Sub-total N/A
4.41
Futures
Sub-total N/A
234.66
Binance
Cold Wallet Laptop
ETH
57.64
3.54
BTC
0.24
0.24
LTC
0.48
0.003
Sub-total
N/A
3.77
Total
N/A
238.43
Less: Alleged Personal Trading Sub Accounts
Total (excluding Alleged Personal Trading Sub
Accounts) [Refer paragraph 47.12 below]
44.

Estimatedvalue (USD)% total2,924,313
2,870,281
2,791,530
1,685,657
1,435,262
1,539,654
13,246,696

22%
22%
21%
13%
11%
12%
100%

15,360
8,146
2,925
253
0

58%
31%
11%
1%
0.0%

26,684
173,403
79,746
253,149

100%
68%
32%
100%

13,526,529
203,142
13,497
172
216,811
13,743,341(2,884,671)

94%
6%
0.0%
100%

10,858,669

The estimated value of Torque’s Crypto Assets has varied substantially since theappointment of the Provisional Liquidators on 2 March 2021. For example, Ether (ETH)
which represents 22% of Torque’s total Crypto Asset portfolio, had a peak value of
USD3,459 and floor value of USD1,456 in this 2 month period – a variance ofapproximately 238%. As set out above, the current value of Torque’s Crypto Assets
is now approximately USD13.7 million, which is a substantial increase from the12previous estimate in the Liquidators’ 2nd Circular (approximately USD9.1 million as at
14 March 2021).
45.

Whilst seeking to secure Torque’s assets, the Liquidators have obtained BVI andSingapore legal advice to establish the legal entitlement to Torque’s different
categories of Crypto Assets as between creditors.

46.

Set out below is a summary of Liquidators’ assessment in respect of Torque’s different
categories of Crypto Assets based on this legal advice (without waiving the Liquidators’right of privilege in respect of the legal advice):
Trading Wallet Crypto Assets
46.1.

The Torque Trading Wallet was a trading service offered to Torque’s Users
whereby Crypto Assets deposited by Users were utilised by Torque as capitalto generate returns through automated, low-risk and high-frequency
cryptocurrency trades, employing techniques known as “arbitrage” and“scalping”;

46.2.

The Crypto Assets deposited by more than 14,000 Users into Torque’s
Trading Wallet were not deposited into any segregated or user-specific wallet.
Instead, they were co-mingled across various digital wallets, including those
associated with the Torque Trading Accounts on Binance and the other
Exchanges. At all times, Torque had exclusive control and powers to deal
with the Crypto Assets in the Trading Wallet by way of the relevant private
key; and46.3.

Liquidators’ conclusion: The Trading Wallet Crypto Assets (USD8.6 million at
the Liquidation Date) are assets of Torque’s estate in liquidation, with theUsers having corresponding creditor claims against Torque for thecryptocurrency assets that they were otherwise entitled to withdraw from theirrespective Trading Wallet accounts with Torque.

Personal Wallet Crypto Assets.
46.4.

The Torque Personal Wallet was a separate service offered to Torque’s
Users, which allowed Users to store cryptocurrency assets in a unique digitalwallet address that was provided to the individual User;

46.5.

However, Torque’s Personal Wallet service did not involve Users transferring
Crypto Assets to digital wallets that belonged to or were controlled by Torque;46.6.

Instead, Users transferred the Crypto Assets to their unique digital Personal
Wallet address that was created for each individual User and which areprovided or ‘hosted’ on the Torque application. Whilst Torque’s underlying
software generated the private keys for its Users in respect of the Personal
Wallets, these private keys were stored in an encrypted form and Torque itself
13was unable to effect any transfers of the Personal Wallet Crypto Assets – at
all times, the Users were in exclusive control of withdrawals from Personal
Wallets;
46.7.

Additionally, Torque had no visibility as to the Crypto Assets stored by Usersin their Personal Wallet. Only Users had visibility of balances and knowledgeof their private key to effect transfers;

46.8.

On 3 March 2021, Torque’s Liquidators “froze’ the Personal Wallets of its
Users by disabling the user interface on the Torque application. As a result,users have been unable to access the Torque Personal Wallet service toeffect any transfer of Crypto Assets held in their individual digital Personal
Wallets; and46.9.

Liquidators’ conclusion: The Personal Wallet Crypto Assets are not assets of
Torque’s estate, in liquidation, on the basis that legal and beneficial ownershipwas never transferred from Users to Torque.

Personal Trading Sub-Accounts

47.

46.10.

Certain creditors advise they had an agreement with Torque management
and/or management of another company with close business connections,Snap Innovations Pte Ltd (“Snap”), whereby their Crypto Assets were held inspecific Torque Sub-Accounts ‘on trust’ for their personal trading. We
understand these Crypto Assets were not deposited on Torque’s BinanceAccounts through the Torque website or application platforms, but insteadtransferred directly to Torque’s Binance Accounts;

46.11.

We have requested further supporting documentation from these
creditors/their lawyers and are in the process of obtaining legal advice toclarify the position; and46.12.

If these creditors/their lawyers provide sufficient evidence to support theseassertions, the Personal Trading Sub-Accounts may also be assessed as‘trust assets’. The value of remaining Crypto Assets in the specific Personal
Trading Sub-Accounts identified by these creditors is approximately USD2.9
million. If the Liquidators or a BVI Court determine that the Personal Trading
Sub-Accounts are ‘trust assets’, the value of Trading Wallet Crypto Asstsavailable to be shared amongst creditors ‘pari passu’ (in equal proportions),
would reduce from approximately USD13.7 million to USD10.9 million.

Whilst the Liquidators have already obtained both Singapore and BVI legal advice inrespect of the above matters, they intend to apply to the BVI Court for directions toconfirm that:
47.1. the Liquidators’ assessment of the ownership and legal entitlements of Crypto
Assets held in Trading Wallets and Personal Wallets is correct;
14

47.2. the Liquidators have the Court’s sanction to convert/realise Torque’s Trading
Wallet Crypto Assets into US Dollars in order to preserve and protect Torque’s
assets and to prevent further losses to Torque’s creditors given
cryptocurrencies are highly volatile and speculative in nature; and47.3. the Liquidators are entitled to reactivate Torque’s Personal Wallet functionality
to allow Users to withdraw these assets (which they have maintained legal andbeneficial title for). It is unclear to the Liquidators what (if any) Crypto Assets
continue to be held by Users in Personal Wallets, but the Liquidators would liketo reinstate this function as a precaution.
48.

The Liquidators put all Users / creditors on notice of their intended BVI court application
for directions. Should creditors wish to make any submissions in respect of the same
they are encouraged to seek their own legal advice.

15

F.

Creditors

49.

Based on the Liquidators’ preliminary review of Torque’s records and investor
database, Torque’s creditor claims are estimated at approximately USD345.7 million
as at Liquidation Date, across more than 14,000 investors.

50.

Key characteristics of Torque’s creditor claims are summarised below:
Cryptocurrency
BTC
ETH
USDT
LTC
XRP
TRX
BCH
TorqueTotal

Quantity(original)
3,222.39
40,946.30
70,079,429.83
38,910.58
9,482,441.77
62,438,177.88
3,001.43
489.25
N/A

Quantity(BTC equiv.)
3,222.39
1,261.43
1,215.64
134.79
77.19
58.07
27.49
0.0004
5,997.00

Creditor Profile
Number of Creditors
Average Claim Value (USD)

Estimated value(USD)
185,764,970
72,719,279
70,079,430
7,770,180
4,449,693
3,347,485
1,584,753
24
345,715,814% total
54%
21%
20%
2%
1%
1%
0.5%
0.0%
100%

14,23540,946Country Profile
Number of Countries
Top 5 Countries by Claim Value
No.
Country
Estimated value (USD)
1.
Singapore
137,070,228
2.
Malaysia
76,467,033
3.
Australia
11,066,529
4.
Indonesia
10,499,345
5.
United States
10,339,859
Sub-total – Top 5
245,442,994
Total
345,715,814

134% total
40%
22%
3%
3%
3%
71%
100%

Indicative Return to Creditors
51.

It is too early in the Liquidation to estimate returns to creditors with any certainty.
However, for illustrative purposes, the current value of the Crypto Assets provides anindicative return to creditors (after Liquidation costs) of:
51.1. between 1.5 and 3 cents in the dollar (based on approximately USD13.7 million
Trading Wallet Crypto Assets at 5 May 2021); or16

51.2. between 1.0 and 2.5 cents in the dollar (based on approximately USD10.9
million in Trading Wallet Crypto Assets at 5 May 2021, which excludes the
Personal Trading Sub-Accounts of USD2.9 million on the basis they are ‘trust
claims’ (refer paragraph 47.12).
52.

This indicative return to creditors of 1 to 3 cents in the dollar assumes:
52.1. a moderate allowance for negative Crypto Asset price fluctuations, however
does not account for the highly volatile and speculative nature of cryptocurrency
prices; and52.2. no recoveries by the Liquidators from potential legal claims against Zee and/or
other parties (refer Section G below); and52.3. Liquidators’ and lawyers’ fees and expenses estimated at between
USD1.5 million and USD2 million.
Liquidation Timeline53.

If the Liquidators do not commence legal proceedings to recover further assets, theLiquidation will take at least 6 months to complete on the following bases:
53.1. Investigations not yet concluded – we expect a further 1 to 2 months will be
required to review the billions of Crypto Assets transactions together with our
cryptocurrency advisors – in this time, we aim to establish whether or not viable
legal claims exist that may result in recovery of material assets for the benefitof creditors from either misappropriated Crypto Assets or other legal claims;
53.2. BVI Court applications – the Liquidators will shortly make an application to the
BVI Court for directions on various issues and may need to do so again – thismay take some time;
53.3. Creditor claim adjudication – the process of verifying creditor identities,
reviewing and adjudicating creditor proof of debt (“POD”) forms will bechallenging and time consuming – it involves more than 14,000 creditors across
120 countries. In our experience, many creditors typically do not complete the
POD forms correctly in the first instance and the Liquidators are required towork with them to amend their POD forms – this can take several months;
53.4. Payment of creditor distributions – the Liquidators will likely need to pay creditor
distributions in US Dollars (rather than cryptocurrency) – verifying bank details,
reviewing and processing payments to 14,000 creditors will take time; and53.5. Statutory obligations - The liquidators will continue to meet their statutory andreporting obligations as required under the Act and Insolvency Rules, 2005 inaccordance with BVI law.

17

54.

If the Liquidators commence legal proceedings to recover further assets, theLiquidation will take at least 12 to 18 months to complete. However, this would only
be considered where projected recoveries would result in a material improvement inreturns to creditors.

18

G.

Investigations and Potential Legal Claims

55.

Torque’s creditor claims are approximately USD345.7 million across more than 14,000
investors and the Crypto Assets under the control of the Liquidators are valued at
approximately USD8.6 million as of 18 March 2021. This currently represents anestimated loss of asset value of approximately USD337.1 million (“Crypto Asset
Losses”).

56.

On the basis that all of Torque’s Crypto Assets are liquidation estate assets, allcreditors will share in the Liquidators’ net asset realisations pari passu (in ‘equal
proportions’). This represents an estimated return to creditors of Torque ofapproximately 2.5 cents in the dollar (or 2.5%) after taking into account the Liquidators’fees and expenses.

57.

The Liquidators’ priority has been to conduct detailed investigations to establish theproportion of the Crypto Asset Losses attributable to:

58.

57.1.

Unauthorised Trades - Crypto Assets Losses resulting from the Unauthorised
Trades – that is, unauthorised leveraged trading allegedly undertaken by Zee.
To date, this has proved challenging due to the inability to extract trading profit
and loss statements from Binance Torque Trading Accounts – the Liquidators
continue to seek disclosure from Binance (including through its legal advisors)in this regard. If the Unauthorised Trades are established as operational
losses in nature, they are not directly recoverable by the Liquidators as
against the counterparties to the relevant trades. Legal claims can be
pursued for these losses from Unauthorised Trades against Zee and/or
potentially other parties for breach of fiduciary duties and other legal bases;
and

57.2.

Misappropriated Assets - Crypto Asset Losses resulting from Zee or otherparties transferring Torque’s Crypto Assets to their personal accounts or
accounts of related parties. On 19 March 2021, a successful application wasmade to the General Division of the High Court of the Republic of Singapore
for an Order of Court, which restrains Zee from disposing of, dealing with, or
diminishing the value of any of his assets whether they are in or outside
Singapore, whether in his own name or not and whether solely or jointly
owned up to the value of USD343.7 million (the “Mareva Injunction”).
Following the Mareva Injunction, the Liquidators have taken immediate steps
to issue letters to all relevant stakeholders giving notice of the Mareva
Injunction, and to serve the Mareva Injunction on Zee. Possible further claims,
including against other parties, are being contemplated.

Given the substantial volume of data, it will take some time to fully reconcile theinformation available from the various sources – based on the Liquidators’ latest
estimates, their investigations will likely involve a review of (at least) 4 billion
transactions (deposits, withdrawals and trades) from more than 14,000 customers
across two different systems.
19

59.

To date, Torque management and Torque Technologies’ team in Vietnam have been
fully cooperative and transparent – making available all requested information.

60.

In respect of asset identification and tracing, the Liquidators have focussed on:
60.1. Crypto Assets – utilising Kroll Group’s substantial cyber/technology expertiseto trace the Unauthorised Transfer and the Misappropriated Assets identified
to their ultimate digital wallet destination and identifying the owner of these
digital wallets and their physical location; and60.2. Other assets of relevant parties – utilising Kroll Group’s substantial
investigations and intelligence services to identify assets globally of Zee and/or
any other relevant parties that were the beneficiary of misappropriated Crypto
Assets.

61.

The tracing of both Crypto Assets and other assets will facilitate potential legal andother recovery action against these individuals in the relevant jurisdictions if thegrounds for the same exist. The Liquidators intend to apply to courts in the relevant
jurisdictions where Torque’s assets are discovered, which is likely in Singapore, BVI,
and Vietnam.
Possible claims under section IX of the Insolvency Act, 2003

62.

For the reasons set out above, the Liquidators’ investigations are ongoing in respectof potential legal claims available under Section IX of the Act in respect of thepromotion, formation, management, conduct of the affairs and insolvency of Torque.

63.

The Liquidators will provide material updates when appropriate and whereconfidentiality permits - it is important the Liquidators do not compromise theirinvestigation or potential routes to recoveries by disclosing certain recovery efforts
publicly.

20

H.

Creditors Meeting and Virtual Town Hall

64.

Pursuant to section 183 of the Act, liquidators appointed by the Court are not required
to call a meeting of creditors unless 10 percent in the value of the creditors of theCompany give the liquidators written notice requesting a meeting.

65.

At this stage, the Liquidators do not intend to convene a formal creditors’ meeting
where creditor claims are first reviewed and assessed – this would be a costly andtime-consuming process which would divert the Liquidators’ resources from theprimary focus of investigation and recovering assets. A formal creditors meeting canoccur at a later stage if appropriate.

66.

Although a formal meeting is not proposed at this time, the Liquidators have, together
with this report issued a 4th Circular that:
66.1. convenes a Virtual Town Hall to provide creditors with an update on theliquidation and present preliminary investigation findings to the extent that they
are not commercially sensitive; and66.2. seeks creditor nominations to participate on an ad hoc creditor committee(“Advisory Co”) for the Torque Liquidation. The Advisory Co will not have any
formal power, however will function as a consultative body whereby members
will be provided detailed updates on the Liquidators’ investigations and be
consulted with and their views sought in respect of legal recovery strategies.
Membership on the Advisory Co will be an unpaid role and will require creditors
to sign non-disclosure agreements.

21

I.
67.

Contact Details
Should you have any queries or require further information, please contact myself or
Kent McParland. Our contact details are set out below:
Torque Borrelli Walsh
Office BVI: +1 284 340 5888
Office SG: +65 6327 1211
Email
: torque@borrelliwalsh.com

Jason Kardachi
Joint Liquidator
Torque Group Holdings Limited (In Liquidation)

Enclosures22Annexure 1
Notice of Appointment of Liquidators

Annexure 2
Creditor Circulars

March 3, 2021

Circular to Customers
Dear Sirs,
Subject: Torque Group Holdings Limited (In Provisional Liquidation), BVI Company Registration
Number: 2024611
Jason Kardachi and I were appointed Joint Provisional Liquidators (“Provisional Liquidators”) of Torque Group
Holdings Limited (“Torque” or “Company”) pursuant to an order of the Eastern Caribbean Supreme Court of the
British Virgin Islands dated 2 March 2021 (“Order”). A copy of the Order will be provided once made available by
the BVI Court Registrar.
Upon the appointment of the Provisional Liquidators, the power of the directors of Torque have ceased and the
directors no longer have any authority to deal with the assets of Torque. All dealings in Torque must now be
authorised by one of the Provisional Liquidators or their authorised representatives.
Among other things, the responsibilities of the Provisional Liquidators include identifying, taking control of andrealising the assets of Torque and carrying out such investigations as the Provisional Liquidators consider
appropriate.
The Provisional Liquidators immediate next steps will focus on:•

identifying and verifying customer claims;•

investigating transactions of concern; and•communications.

BORRELLI WALSH (BVI) LIMITED
3rd Floor, Commerce House
P.O. Box 3339
Road Town, Tortola VG1110
British Virgin Islands

www.borrelliwalsh.com

Identifying and verifying customer claims
Torque has over 14,000 estimated customers spanning more than 120 countries. The Provisional Liquidators
process to properly identify customers and verify the value of their claims will be a complex and time-consuming
process.
The Provisional Liquidators are considering cost effective methods to undertake this process and will revert withan update as soon as possible.
Investigating transactions of concern
As many Torque customers are aware, various transactions of concern were recently identified involving a former
management representative who: (1) undertook unauthorised leveraged cryptocurrency trades resulting insubstantial losses to the Company; and (2) may have misappropriated certain cryptocurrency assets.
The Provisional Liquidators will investigate the circumstances of these transactions of concern and seek torecover/seize misappropriated assets and minimise losses to the Company’s creditors. This will involve expert
forensic accounting and technology services.
Whilst these investigations will be pursued as a priority, the Provisional Liquidators expect this process will taketime given:•

the complexity involved in tracing movement of cryptocurrency assets;•

extensive scale of customers and information that needs to be obtained, reviewed, and analysed; and•what appears to be at this early stage relatively weak corporate governance, controls and documentation.

All Torque customer accounts to remain frozen
Unfortunately, all Torque user accounts will remain frozen for the foreseeable future.
The Provisional Liquidators are not legally capable of repaying any Torque customers until they have properly
verified all 14,000 customer claims and completed at least their preliminary investigations into the transactions ofconcern. Given the number of customers and the complexity of Torque’s business, these processes will bechallenging and likely take (at least) several months.
The Provisional Liquidators aim to provide an estimated timeline for securing/realising Torque’s cryptocurrency
assets and verifying creditor claims in coming weeks.
Communications Protocol
The Provisional liquidators will endeavour to update Torque customers as regularly as possible. However, given
there are approximately 14,000 customers, responding to all customer queries individually is not feasible oreconomical. It is important the Provisional Liquidators focus the Company’s limited cash resources on investigating
and recovering assets to maximise the returns available to customers.
The Provisional Liquidators’ current intention is to issue regular updates (“Creditor Circulars”) to all customers byemail and deal with other queries raised as appropriate. The Creditor Circulars will also be uploaded to Borrelli2Walsh’s website (https://www.borrelliwalsh.com/creditors/). In the event that any meaningful progress is otherwise
made, the Provisional Liquidators will issue further ad hoc updates as and when appropriate.
The Provisional Liquidators’ answers to individual creditor queries will be consolidated and issued to all potential
creditors by Creditor Circular as and when appropriate.
For any urgent customer, creditor and media enquiries, please contact the Provisional Liquidators at:
torque@borrelliwalsh.com.

Sincerely,

Philip Smith
Joint Provisional Liquidator
Torque Group Holdings Limited(In Provisional Liquidation)3

March 15, 2021

2nd Circular to Customers / Creditors
Dear Sirs,
Subject: Torque Group Holdings Limited
BVI Company Registration Number: 2024611(In

Provisional

Liquidation)(“Torque”)

I refer to the Circular dated 3 March 2021 (“1st Circular”), in which the Provisional Liquidators notified creditors of
their appointment and provided an update on immediate next steps. A copy of the Court Order is now available
and is enclosed (case number BVIHCOM2021/0031).
Unless otherwise defined herein, capitalised terms used in this circular shall have the same meanings as thosedefined in the 1st Circular.
The purpose of this circular (“2nd Circular”) is to provide customers with an update on progress since our
appointment as Provisional Liquidators of Torque and next steps.
A.

Background
1)

Torque Group Structure

Torque primarily serves as a global online platform for crypto-to-crypto trading and provides users (“Users”) with a
trading platform and other crypto-related services via its websites and mobile applications (“Services”).
Torque accepted deposits from the following cryptocurrencies (i) Bitcoin (“BTC”); (ii) Ether (“ETH”); (iii) Tether(“USD₮”); (iv) Litecoin (“LTC”); (v) Bitcoin Cash ("BCH"); (vi) Tron ("TRX"); and (vii) Ripple ("XRP"). Torque did
not accept deposits in any other cryptocurrency or fiat currency.
Torque is a part of the “Torque Group” which also comprises:•

Torque Management Ltd., a company incorporated in Malta (“Torque Management”), which has no operations,assets or liabilities; and•Torque Technologies Company Ltd., a company incorporated in Vietnam and wholly-owned and solely
directed by Nguyễn Mạnh Hiếu, an independent Vietnamese national (“Torque Technologies”).

BORRELLI WALSH (BVI) LIMITED
3rd Floor, Commerce House
P.O. Box 3339
Road Town, Tortola VG1110
British Virgin Islands

2169231-1

www.borrelliwalsh.com

For the avoidance of doubt, the appointment of Provisional Liquidators of Torque does not extend to TorqueManagement or Torque Technologies – they are not subsidiaries of Torque.
Torque has a decentralised labour force with its core technology and operations teams working at the direction of
Torque Technologies in Vietnam who are outsourced from a Vietnamese third party.
The Provisional Liquidators have been advised that there are no contracts in place formalising the above
arrangements between Torque and Torque Technologies.
2)

Binance Accounts

Torque primarily uses Binance (www.binance.com) as a cryptocurrency exchange to hold its Crypto Assets in a
network of over 240 Binance sub-accounts (“Sub-Accounts”) linked to a main Binance account (“Main Account”)(collectively, the “Binance Accounts”). Each of these Sub-Accounts were used by Torque for trading the Crypto
Assets to generate profits. Any external withdrawals of the Crypto Assets from the Sub-Accounts need to first betransferred to the Main Account to transact with third parties.
The Provisional Liquidators have identified that the Main Account is not a corporate Binance account, as corporate
accounts were not available on Binance when Torque commenced trading. Instead, the Main Account is anindividual account in the name of an employee held under a nominee arrangement for the benefit of Torque. The
individual nominee has issued a letter to the Provisional Liquidators formally acknowledging the nominee
arrangements and that the associated Crypto Assets are assets of Torque.
B.

Role of Provisional Liquidators/Liquidators

The Provisional Liquidators are officers of the BVI Court appointed to act on behalf of Torque’s creditors. The
provisional liquidation and, ultimately, any liquidation that follows, is a Court process which the BVI Court controls
through its appointed provisional liquidators and liquidators. In addition to their duties to the Court as officers of
the Court, the Provisional Liquidators owe duties to Torque’s creditors. Whilst the Provisional Liquidators will seek
to work with the directors, officers and shareholders of Torque in order to meet their duties to the Court and to
Torque’s creditors, the Provisional Liquidators do not act on behalf of the directors, officers and/or shareholders of
Torque.
Under section 171 of the British Virgin Islands (the “BVI”) Insolvency Act, 2003 (“Act”), a provisional liquidator has
all the rights and powers of a liquidator to the extent necessary to maintain the value of the assets and to carry out
the functions for which he was appointed. The Court may determine the powers of the provisional liquidator if itconsiders fit. The Court has done so in this case to assist the Provisional Liquidators in tracking and tracing
Torque’s assets.
The Provisional Liquidators are bound by obligations set out in the Act and other duties imposed by the Court as
outlined in the Court Order. Section 184 of the Act states that the Provisional Liquidators act as officers of the
Court and are the agent of the company in liquidation – a key obligation is acting independently and in the bestinterests of creditors. This was emphasised during the hearing which resulted in the appointment of the Provisional
Liquidators.
Upon the appointment of the Provisional Liquidators, the power of the directors of Torque have ceased and the
directors no longer have any authority to deal with the assets of Torque. All dealings in Torque and its assets must
now be authorised by one of the Provisional Liquidators or their authorised representatives.
All affairs, business, and property of Torque are now controlled by the Provisional Liquidators for the purpose ofpreserving, protecting and recovering Torque’s assets. Among other things, the responsibilities of the Provisional
Liquidators include identifying, taking control of, protecting, and preserving the assets and business of theCompany and carrying out such investigations as the Provisional Liquidators consider appropriate. As the BVI
Court has ordered, that includes pursuing Torque’s assets in other jurisdictions if the Provisional Liquidators believethat to be a proper course in light of their duties.

2169231-1

2

C.

Experience of Borrelli Walsh, a Kroll Business

As of 30 November 2020, Borrelli Walsh is a part of Kroll (formerly known as Duff & Phelps), the world’s premierprovider of services and digital products related to governance, risk and transparency. Kroll works with clients
across diverse sectors in the areas of valuation, expert services, investigations, cyber security, corporate finance,
insolvency, restructuring, legal and business solutions, data analytics and regulatory compliance. It has nearly
5,000 professionals in 30 countries and territories around the world, that are now operating as one team to assist
the Provisional Liquidators in respect of Torque (together, the “Kroll Group”).
The Kroll Group has played key roles in many of the region’s most significant and complex insolvencies, including
most recently the liquidation of Gatecoin Limited, a Hong Kong based cryptocurrency exchange that involved over
100,000 investors and HKD302.6 million (USD39 million) of cryptocurrency claims. Set out below is a high-levelsnapshot of Kroll Group’s relevant expertise:•

Insolvency and restructuring – Kroll Group is a market leading insolvency and restructuring firm specialisingin complex and cross border assignments in Asia and the Caribbean. The expert team has extensive forensic
accounting experience and apply this rigorous approach to their liquidation investigations, including
establishing fund flows and asset tracing. With the benefit of these forensic investigations, we have a trackrecord of successfully proving accounting frauds, securing assets internationally and recovering funds as
Liquidators from legal claims against directors, auditors and shareholders, including through litigation and/or
settlement negotiations, for the benefit of its creditors.

•

Investigations and business intelligence - Kroll Group is internationally recognised as the premier firm in
conducting investigations of fraud and misconduct. We develop facts and intelligence to support successful
litigation strategies, perform due diligence investigations on prospective deals, and evaluate business
opportunities and the strengths and weaknesses of competitors; and•Cryptocurrency asset tracing and recovery - Kroll Group holistically investigates the technical and nontechnical clues, leveraging off both to identify where the funds went and who was responsible. Kroll Group’s
advantage lies in the diverse skills of its investigative teams, comprised of former prosecutors, forensic
accountants, investigators, computer forensic specialists and intelligence analysts. Kroll Group pioneered theconcept of investigative accounting — the combination of robust forensic accounting with traditional
investigative and intelligence gathering techniques and cutting-edge blockchain analytics. Kroll Group is
involved in several ongoing actions for and against exchanges for the recovery of assets from hacks and thefts,
including the identification of those responsible for the theft of USD tens of millions in BTC from a European
exchange. Recent public engagements include being selected by the US SEC in the AriseBank case to assist
the first ever receiver in an enforcement action against the promoters of an ICO, and being selected by theTrustee in the Quadriga bankruptcy to trace crypto assets following the collapse of the exchange in Canada.

D.

Securing of Assets

Upon their appointment, the Provisional Liquidators immediately sought to secure control of Torque’s Crypto Assets
as a matter of urgency by:•freezing all Torque user accounts on the Torque system (website and application);•securing control of Torque’s Binance Accounts (Main Account and Sub-Accounts) by changing login
credentials and two-factor identification details; and•issuing a formal notification letter to Binance advising of the Provisional Liquidators appointment, requestingthat all Torque Binance Accounts be immediately frozen and various historical trading information provided.

Torque’s Crypto Assets under the control of the Provisional Liquidators comprise approximately 149 BTC
equivalent (across multiple cryptocurrencies) representing a USD equivalent value of approximately USD9.1 million
as at 14 March 2021.

2169231-1

3

Torque’s Crypto Assets are comprised of:
Cryptocurrency

BTC equivalent

Estimated value(USD)% Total

BTC

48.42

2,952,186.72

33%

USDT

32.68

1,992,500.69

22%

ETH

25.36

1,546,267.71

17%

XRP

15.75

960,041.94

11%

BNB

10.55

643,151.05

7%

Others16.15

984,410.46

11%

Total

148.91

9,078,558.57

100%

Torque’s management have advised that Torque does not own any assets other than Crypto Assets. The
Provisional Liquidators are making their own enquiries to independently verify this.
E.

Creditor Claims

Based on our preliminary review of Torque’s records and investor database, Torque’s creditor claims are estimatedat USD325 million as at 2 March 2021 across more than 14,000 investors.
As mentioned in the 1st Circular, the Provisional Liquidators are not legally capable of repaying any Torquecustomers until they have properly verified all 14,000 customer claims and completed at least their preliminary
investigations and have been directed to do so by the BVI Court. Given the number of customers and thecomplexity of Torque’s business, the Provisional Liquidators will require time in order to, among other things, (1)ascertain the legal entitlements of customers, (2) verify whether appropriate Know-Your-Client (“KYC”) procedures
were conducted on customers, and (3) set up a proper procedure to verify claims from all creditors in accordancewith BVI law.
These processes will necessarily and reasonably take time and require legal advice and, potentially, the BVI Court’s
direction on matters including (but not limited to):•Assets – establishing entitlements to Torque’s Crypto Assets as between creditors of Torque and othercompeting parties;•

Personal Trading Accounts - certain creditors advise they had an agreement with Torque management
whereby their Crypto Assets were held in specific Torque Sub-Accounts ‘on trust’ for their personal trading.
These Crypto Assets were not deposited on Torque’s Binance Accounts through the Torque website or App
platforms, but separately transferred to Torque’s Binance Accounts. We have requested further supporting
documentation from these creditors and will obtain legal advice to clarify the position; and•Creditor claims – under BVI law, the Provisional Liquidators must ask creditors to submit proofs of debt (“POD”)
that set out the value of their claims and provides relevant supporting details. The PODs and supporting
documents will allow the Provisional Liquidators to review and accept creditor claims. Once the BVI Court has
issued an Order appointing Liquidators (as opposed to Provisional Liquidators), the Liquidators, with thebenefit of these PODs, will pay distributions to all creditors ‘pari passu’ (meaning in equal shares based onvalue). As mentioned in the 1st Circular, Torque has over 14,000 estimated customers spanning more than
120 countries. The Provisional liquidators are considering cost effective methods to undertake this processthat balances the requirements under BVI law to properly validate PODs whilst ensuring the Provisional
Liquidators/Liquidators’ time costs are more appropriately focused on recovering assets for the benefit of
Torque’s creditors.

These legal issues, together with information challenges (explained at Section F.1 below), will require time for theProvisional Liquidators to resolve.
We will write to creditors outlining the creditor claim verification (POD) process in due course.

2169231-1

4

F.

Preliminary Investigation Update

Torque’s creditor claims are approximately USD325 million and the Crypto Assets under the control of theProvisional Liquidators are valued at approximately USD9.1 million as of 14 March 2021, representing an apparent
current loss of asset value of approximately USD317 million (“Crypto Asset Losses”).
The Provisional Liquidators’ immediate priority is to conduct a detailed investigation to establish the proportion of
the Crypto Asset Losses attributable to:•

Trading Losses – Crypto Assets Losses resulting from unauthorised leveraged cryptocurrency trading
allegedly undertaken by the former Chief Technology Officer (“CTO”) – where these losses are considered
operational in nature, they are not directly recoverable by the Provisional Liquidators as against thecounterparties to the relevant trades. In any event, legal claims can be pursued for these Trading Losses
against the former CTO for breach of fiduciary duties and other legal bases; and•Misappropriated Assets – Crypto Asset Losses resulting from certain individuals misappropriating Torque’s
Crypto Assets to their personal accounts or accounts of related parties. To date, we have established that
Torque’s former Chief Technology Officer (“CTO”) Wu Zhongyi (“Zee”) appears to have misappropriated atleast 72 BTC (approximately USD5 million in value) from Torque. At all material times, Zee had approvalrights and control of Torque’s Binance Accounts. From our preliminary investigations, it appears that Zeegave instructions to Binance to approve (‘whitelist’) a new BTC wallet address (“Unauthorised Wallet”) using
his Binance Account approval rights. Once the Unauthorised Wallet was approved by Binance, Zee transferred
72 BTC from Torque’s Binance Accounts to the Unauthorised Wallet (“Unauthorised Transfer”). The
Unauthorised Transfer was not transferred through Torque’s nominated company wallet (managed by TorqueVietnam) and therefore was not recorded or recognised on Torque’s system as a transfer. We are in theprocess of tracing the Unauthorised Transfer to the Unauthorised Wallet (refer to Section F.2 below).

The Provisional Liquidators’ investigations of Crypto Asset Losses is necessarily detailed and complex, however
they are focussed on identifying, freezing and recovering Crypto Assets as quickly as possible.
To protect the integrity of the Provisional Liquidators’ investigations, some of these efforts must remain confidential
and we request your understanding in this regard. We will provide you material updates as and when appropriate.
Set out below are the key workstreams being undertaken in respect of the Provisional Liquidators’ investigation:
1)

Securing Torque’s books and records

The first and most critical step of the Provisional Liquidators’ investigation is securing all available information in
respect of Torque’s customers and Crypto Assets held on both (i) Torque’s electronic databases and applications(managed by Torque Vietnam); and (ii) Torque’s Binance system.
Immediately upon appointment, Kroll Group cyber team forensically imaged all of Torque’s back-end databases,
applications and server information. Additionally, the Provisional Liquidators extracted a full transactional reportsetting out all Deposits and Withdrawals from the Binance Accounts.
Given the substantial volume of data, it will take some time to fully reconcile the information available from thevarious sources – this involves (at least) 3.5 million transactions (deposits, withdrawals and trades) from morethan 14,000 customers across two different systems. The Provisional Liquidators are utilising the Kroll Group’s
cyber security and technology experts in this regard.
To date, Torque management and Torque Technologies’ team in Vietnam have been fully cooperative andtransparent – making available all requested information.
2)

Tracing and Freezing Assets

The Provisional Liquidators’ asset tracing activities are focussed on:

2169231-1

5•Crypto Assets – utilising Kroll Group’s substantial cyber/technology expertise to trace the Unauthorised
Transfer and any other misappropriated Crypto Assets identified to their ultimate digital wallet destinationand identifying the owner of these digital wallets and their location.

•

Other assets of relevant parties – utilising Kroll Group’s substantial investigations and intelligence services to
identify assets globally of Zee and/or any other relevant parties that were the beneficiary of misappropriated
Crypto Assets.

The tracing of both Crypto Assets and other assets will facilitate potential legal and other recovery action against
these individuals in the relevant jurisdictions if the grounds for the same exist. This will likely involve the Provisional
Liquidators applying to courts in the relevant jurisdictions (Singapore, BVI, Vietnam or wherever Torque’s assets
are discovered).
3)

Liquidators’ Legal Claims

Liquidators have several statutory options available to them under the Act to facilitate investigations and asset
recoveries for the benefit of all creditors. Part IX of the Act permits the liquidators to make an application to the
Court for an order requiring a person to make restitution to Torque if they commit one of the following offences:•

Retention or misapplication of money or other assets of Torque by an officer of Torque or a person closely
connected to the formation of, or management of Torque;•

Any person knowingly carrying on the business with intent to defraud the creditors or for any fraudulent
purpose; or•A current or former director of Torque who continued trading knowing the Company was insolvent with noreasonable prospect to avoid going into insolvent liquidation.

To assist in their investigations, the Provisional Liquidators can make an application under section 284 of the Act
to examine a party before the Court. This includes, among others:•

Current or former officers of Torque;•

Current or former members of Torque;•

A person involved with the promotion or formation of Torque;•

A person currently employed (or previously employed within the relevant period) by Torque;•

Any person considered to be capable of giving information concerning Torque; or•

Any person known or suspected to hold assets of Torque or be indebted to Torque.

An examinee is examined under oath and is required to answer all questions the Court may ask or allow to be
asked. A defence of possible incrimination by answering a question is not permitted under the Act.
Additionally, under Part VIII of the Act, the liquidators can review any transaction falling within the relevant
vulnerability period (“Vulnerability Period”) to determine if it is a voidable transaction and the asset is potentially
recoverable for the benefit of creditors. Voidable transactions include, among others:•

Unfair preference payments; and•Undervalue transactions.

The Vulnerability Period is 2 years before the Liquidation appointment date for Connected Persons (related parties),
otherwise 6 months before the Liquidation appointment date.

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6

The Provisional Liquidators’ prospects of successfully recovering funds for creditors using the above legal claims
will be considered as the investigation progresses and further information is obtained.
G. Common Questions and Answers
The Provisional Liquidators have received thousands of queries from customers in respect of Torque. As set out
in the 1st Circular, the Provisional Liquidators will endeavour to update Torque customers and address any queries
submitted as regularly as possible. However due to the number of customers and volume of queries, responding
to all customer queries individually is not feasible or economical.
The Provisional Liquidators’ answers to individual customer queries will be consolidated and issued to all creditorsand customers in regular updates (“Circulars”) issued by email on posted on Borrelli Walsh’s website(https://www.borrelliwalsh.com/creditors/).
Please find enclosed an Investor Questions and Answers (“Investor Q&A”) document that addresses the common
queries received in the first week of the Provisional Liquidation of Torque.
For any urgent customer, creditor and media enquiries, please contact the Provisional Liquidators at:
torque@borrelliwalsh.com.

Sincerely,

Philip Smith
Joint Provisional Liquidator
Torque Group Holdings Limited(In Provisional Liquidation)

2169231-1

7

Investor Q&A
No.

Category

Question

Answer1

ClaimsWhen can I get my money back?

Torque has entered Provisional

2

ClaimsWhat do I need to do to get mymoney back?

Liquidation and all Torque user accounts
will remain frozen for the foreseeable
future.

3

ClaimsCan I withdraw my investment now?

The Provisional Liquidators are notlegally capable of repaying any Torque4

ClaimsCan I still recover my money?

customers until they have properly
verified all 14,000 customer claims and5

ClaimsWhat information do you need to
speed up my refund?

completed at least their preliminary
investigations and the BVI Court directs

6

ClaimsIs there a repayment scheme?

7

Claims

Are there any forms to fill in to
recover my money?

8

9

10

ClaimsClaimsClaims

How much are we expecting to getback from the liquidation?
Why can't I access or recover moneyfrom my personal wallet?
Torque management has promised to
repay all deposits from 8 and 9
February 2021.

11

Future Updates

What do I do now?

12

Future Updates

Where will we receive updates fromnow on?

13

Future Updates

distributions to be made. Given thenumber of customers and the complexityof Torque’s business, these processes
will be challenging.
The Provisional Liquidators aim toprovide an estimated timeline forsecuring / realising Torque’s
cryptocurrency assets and verifying
creditor claims in coming weeks.
In the event that no further assets can berecovered by the Provisional Liquidatorsfrom related parties or third parties, anominal distribution to creditors may bepossible during 2021.
However, in the event that theDo you have updates on thecompany?

Provisional Liquidators investigations
identify legal claims and assets torecovery from related or third parties that
increase the return to creditors, this will
involve litigation across multiple
jurisdictions and take more time.
At this stage, it is too early to determine
the timing and quantum of any
distribution to creditors.
Regular updates ("Circulars") will be sent
via email and uploaded on to Borrelli
Walsh's website(https://www.borrelliwalsh.com/creditors/)

2169231-1

8

14

Future Updates

How do I sign up for the mailing
updates on the recovery process?

If you have not received the Circular via
email, please contact us via
torque@borrelliwalsh.com to be added
into the mailing list.

15

Liquidation

What does a liquidation mean?

A company is placed in liquidation when
it is insolvent or when the Court
determines it is just and equitable for thecompany to be placed into liquidation.
Refer to section 2) of the 2nd Circular forthe role and obligations of liquidators.

16

Liquidation

Why is my money from Torque being
used to pay liquidator fees?

At this stage, the Provisional Liquidators
have not used any of the Torque’s
Crypto Assets to pay liquidators’ fees.
However, as a matter of BVI Insolvency
Law, liquidators are typically allowed touse company assets in order to pay theirliquidation fees and expenses with theapproval of the Court or a company’s
creditors.
This is a necessary mechanism to allow
an independent party who acts for the
benefit of all creditors to undertake thework necessary to collect a company’s
assets, investigate and pursue claims
and distribute recoveries to creditors.

17

Liquidation

How long will this process take?

It is too early to determine how long theliquidation of Torque will take tocomplete. A liquidation of this size andcomplexity, that will likely involve
substantial litigation and asset recovery
work across multiple jurisdictions, will not
be a short process.
The Provisional Liquidators will provide
an estimated timeline for securing /realising Torque’s Crypto Assets andverifying creditor claims as soon aspractical and appropriate.
Regular updates ("Circulars") will be sent
via email and uploaded on to Borrelli
Walsh's website(https://www.borrelliwalsh.com/creditors/)

2169231-1

918

Investigations

Is this some kind of scam?

19

Investigation

Is there any action being taken
against the offending former
employee?

20

Trading

Will the company start trading again?

Refer to ‘Section F. Preliminary
Investigations’ of our 2nd Circular.

Torque ceased trading immediately on
the appointment of the Provisionalliquidators.
On the basis that Torque is clearly
insolvent (creditor claims greatly exceed
assets), it will not likely everrecommence trading.

2169231-1

10March 31, 2021

3rd Circular to Creditors
Dear Sirs,
Torque Group Holdings Limited (In Liquidation) (“Torque”)
BVI Company Registration Number: 2024611
I refer to the Circular dated 15 March 2021 (“2nd Circular”), in which the Provisional Liquidators provided creditors
an update on progress since their appointment and findings from their preliminary investigations.
Unless otherwise defined herein, capitalised terms used in this circular shall have the same meanings as thosedefined in the 2nd Circular.
The purpose of this circular (“3rd Circular”) is to provide creditors with an update on the Provisional Liquidators’
progress since the 2nd Circular and next steps.
A. Appointment of Joint Liquidators
On 18 March 2021, the Provisional Liquidators were appointed as Joint Liquidators (“Liquidators”) of Torquepursuant to an order of the Eastern Caribbean Supreme Court of the British Virgin Islands (“BVI Court”) dated 18
March 2021 (“Order”) – this means that Torque is now in liquidation rather than provisional liquidation. A copy of
the Court Order is now available and is enclosed (case number BVIHCCOM2021/0031).
B. Role and Responsibilities of the Liquidators
The roles and responsibilities of the Liquidators are set out in the British Virgin Islands (the “BVI”) Insolvency Act,
2003 (“Act”) and as provided in the Order appointing them. Under section 186 of the Act, the Liquidators have all
the rights and powers to the extent necessary to maintain the value of the assets and to carry out the functions forwhich they were appointed. Additionally, as officers of the court, the Liquidators may apply to the BVI Court at any
time for directions with respect to matters arising in the liquidation.
Under section 178 of the Act, the Liquidators are required to advertise their appointment in accordance with theRules. Notices have been advertised in the Business Times in Singapore and the BVI Beacon and the BVI Gazette.

BORRELLI WALSH (BVI) LIMITED
3rd Floor, Commerce House
P.O. Box 3339
Road Town, Tortola VG1110
British Virgin Islands

www.borrelliwalsh.com

Creditors Meeting and Town Hall
Pursuant to section 183 of the Act, Liquidators appointed by the Court are not required to call a meeting of creditors
unless 10 percent in value of the creditors of the Company give the Liquidators written notice requesting a meeting.
At this stage, the Liquidators do not intend to convene a formal liquidation creditors’ meeting where creditor claims
are first reviewed and assessed – this would be a costly and time-consuming process which would divert the
Liquidators’ resources from its primary focus of investigation and recovering assets. A formal creditors meeting canoccur at a later stage when more is known about Torque’s assets.
Although a formal meeting is not proposed at this time, the Liquidators intend to convene a virtual town hall toprovide creditors an update on the liquidation and present preliminary findings that can be shared from ourinvestigations. In order for the creditors’ town hall to be as useful as possible, we require time to progress ourinvestigations – we will contact creditors with details of the town hall in coming weeks. Separately, the Liquidators
will continue to update all parties through circulars as and when meaningful progress has been made and material
events occur.
Preliminary report
Under section 226 of the Act, the Liquidators of Torque are required to prepare a preliminary report within 60
days of the commencement of the Liquidation, covering, to the best of our knowledge, a description of the assets
and liabilities of Torque and possible claims under the Act. The report will be circulated to all of Torque’s
creditors and filed with the BVI Court. The Liquidator may apply to the BVI Court to extend the 60-day
period if that is necessary.
C.

Investigations Update

Legal strategy and Recovery options
As mentioned in the 2nd Circular, the Liquidators identified Crypto Assets that appear to have been transferredwithout proper authority by or at the direction of Torque’s former Chief Technology Officer (“CTO”), Wu Zhongyi(“Zee”). The Liquidators have been working with its legal advisors, Rajah & Tann Singapore LLP, in regard to legal
strategy and recovery options.
On 19 March 2021, a successful application was made to the General Division of the High Court of the Republicof Singapore for an Order of Court, which retrains Zee from disposing of, dealing with, or diminishing the value of
any of his assets whether they are in or outside Singapore, whether in his own name or not and whether solely or
jointly owned up to the value of USD 343.7 million (the “Mareva Injunction”).
Following the Mareva Injunction, the Liquidators have taken immediate steps to issue letters to all relevant
stakeholders giving notice of the Mareva Injunction, and to serve the Mareva Injunction on Zee himself.
Possible further claims, including against other parties, are being contemplated. The Liquidators will provide you
material updates when appropriate and where confidentiality permits - it is important that the Liquidators do notcompromise their investigation or potential routes to recoveries by disclosing certain recovery efforts publicly .
Tracing of Assets
The Liquidators’ continue to conduct significant Crypto Asset tracing activities – set out below are some high-level
updates on the Liquidators’ investigations:•

Crypto Assets – working with Kroll Group’s cyber team, the Liquidators are in the process of reviewing
billions of transactions to establish the breakdown of leveraged trading losses compared tomisappropriated assets. As a part of this, Kroll’s cyber team is also investigating and tracing certain digitalwallets addresses that received material withdrawals from Torque’s Binance account; and•Relevant Parties – the Liquidators are also conducting investigations into Torque’s management andrelated parties to establish each of their deposits, withdrawals and any profit share from the Crypto Assets.

2

D. Torque Personal Wallet
The Crypto Assets currently in the control of the Liquidators relate to Trading Wallet balances of Torque’s
customers. Separately, the Liquidators understand that Torque customers were able to have their Personal Wallet
Crypto Assets ‘hosted’ on Torque’s main application (website or mobile application). As a result of the freezing of
Torque’s application generally, and the insolvency of Torque, Torque customers’ access to these Personal Wallets
has been restricted. The Liquidators are currently working to resolve issues in respect of these Personal Walletbalances and will provide an update once it is able to.
E.

Common Questions and Answers

The Liquidators’ answers to common customers queries continue to be consolidated and issued to customers inCirculars or the Investor Q&A uploaded on Borrelli Walsh’s website at www.borrelliwalsh.com/creditors.
For any urgent customer,
torque@borrelliwalsh.com.

creditor

and

media

Sincerely,
Philip Smith

Joint Liquidator
Torque Group Holdings Limited(In Liquidation)

3

enquiries,

pleasecontacttheLiquidators

at:Investor Q&A
No.

Category

Question

Answer1

ClaimsWhen can I get my money back?

Torque has entered Liquidation and all
Torque user accounts will remain frozen

2

ClaimsWhat do I need to do to get mymoney back?

until all legal issues relating to them aredetermined.

3

ClaimsCan I withdraw my investment now?

The Liquidators are not legally capable

4

ClaimsCan I still recover my money?

of repaying any Torque customers until
they have properly verified all 14,000

5ClaimsWhat information do you need to
speed up my refund?

customer claims and completed at least
their preliminary investigations and the
BVI Court directs distributions to be
made. Given the number of customers

6

ClaimsIs there a repayment scheme?

and the complexity of Torque’s business,these processes will be challenging.

7

Claims

Are there any forms to fill in to
recover my money?

The Liquidators intend to provide an

8

9

10

ClaimsClaimsClaims

How much are we expecting to getback from the liquidation?
Why can't I access or recover moneyfrom my personal wallet?
Torque management has promised to
repay all deposits from 8 and 9
February 2021.

Future Updates

What do I do now?

12

Future Updates

Where will we receive updates fromnow on?

Future Updates

verifying creditor claims in coming
weeks.
It is too early to predict with any
accuracy the timing or amount(s) ofdistributions to creditors. In the eventthat no further assets can be recoveredby the Liquidators from related parties or
third parties, a nominal distribution tocreditors may be possible during 2021.

11

13

estimated timeline for securing / realising
Torque’s cryptocurrency assets andDo you have updates on thecompany?

However, in the event that the
Liquidators investigations identify legal
claims and assets to recovery from
related or third parties that increase thereturn to creditors, this will involve
litigation across multiple jurisdictions andtake more time.
At this stage, it is too early to determine
the timing and quantum of any
distribution to creditors.
Regular updates ("Circulars") will be sent
via email and uploaded on to Borrelli
Walsh's website(https://www.borrelliwalsh.com/creditors/)

4

14

15

Future Updates

Liquidation

How do I sign up for the mailing
updates on the recovery process?

If you have not received the Circular via

What does a liquidation mean?

A company is placed in liquidation when
it is insolvent or when the Court

email, please contact us via
torque@borrelliwalsh.com to be added
into the mailing list.

determines it is just and equitable for thecompany to be placed into liquidation.
Refer to section 2) of the 2nd Circular forthe role and obligations of liquidators.
16

Liquidation

Why is my money from Torque being
used to pay liquidator fees?

At this stage, the Liquidators have notused any of the Torque’s Crypto Assets
to pay liquidators’ fees.
However, as a matter of BVI Insolvency
law, liquidators are typically allowed touse company assets in order to pay theirreasonable and approved liquidation
fees and expenses.
This is a necessary mechanism to allow
an independent party who acts for the
benefit of all creditors to undertake thework necessary to collect a company’s
assets, investigate and pursue claims
and distribute recoveries to creditors.
The Liquidators are mindful that they areappointed by the Court with duties to the
Court and stakeholders.

17

Liquidation

How long will this process take?

It is too early to determine how long theliquidation of Torque will take tocomplete. A liquidation of this size andcomplexity, that will likely involve
substantial litigation and asset recovery
work across multiple jurisdictions, will not
be a short process.
The Liquidators will provide an estimatedtimeline for securing / realising Torque’s
Crypto Assets and verifying creditor
claims as soon as practical andappropriate.
Regular updates ("Circulars") will be sent
via email and uploaded on to Borrelli

5Walsh's website(https://www.borrelliwalsh.com/creditors/)
18

Investigations

Is this some kind of scam?

19

Investigation

Is there any action being taken
against the offending former
employee?

20

Trading

Will the company start trading again?

Refer to ‘Section F. Preliminary
Investigations’ of our 2nd Circular.

Torque ceased trading immediately on
the appointment of the Provisionalliquidators.
On the basis that Torque is clearly
insolvent (creditor claims currently
greatly exceed assets), absent amaterial change or a recovery of all or
substantially all of Torque’s missing
assets, it will not likely ever recommence
trading.

6Annexure 3
Letters to the BVI Registry Corporate Affairs

Annexure 4
Advertisements
BVI Beacon
Virgin Islands Gazette
Singapore Business Times

Annexure 5
Police Report of Mr Bernard OngAnnexure 6
Draft Letter to Creditors May 2021

May 7, 2021

4rd Circular to Creditors
Dear Sirs,
Torque Group Holdings Limited (In Liquidation) (“Torque”)
BVI Company Registration Number: 2024611
I refer to the Circular dated 31 March 2021 (“3rd Circular”), in which the Liquidators provided
creditors an update on progress since their appointment and findings from their preliminary
investigations.
Unless otherwise defined herein, capitalised terms used in this circular shall have the same
meanings as those defined in the 3rd Circular.
The purpose of this circular (“4th Circular”) is to provide creditors with an update on the
Liquidators’ progress since the 3rd Circular.
A. Preliminary Report to Creditors
Pursuant to section 226 of the BVI Insolvency Act, 2003, the Liquidators of Torque are required
to prepare a preliminary report to creditors (“Liquidators’ Report”). A copy of the Liquidators’
Report dated [7] May 2021 is enclosed.
The Liquidators emphasise paragraph [48] of the Liquidators Report – the Liquidators
intend to shortly apply to the BVI Court for directions confirming that:
1.

The Liquidators’ assessment of the ownership and legal entitlements is correct andappropriate in respect of cryptocurrency assets transferred by Users in relation to:
1.1. Trading Wallets – these cryptocurrency assets are assets of Torque’s estate, in

liquidation, with Users having corresponding creditor claims against Torque for thecryptocurrency assets that they were otherwise entitled to withdraw from theirrespective Trading Wallet accounts with Torque; andBORRELLI WALSH (BVI) LIMITED
3rd Floor, Commerce House
P.O. Box 3339
Road Town, Tortola VG1110
British Virgin Islands

www.borrelliwalsh.com

1.2. Personal Wallets – these cryptocurrency assets are not assets of the Liquidation

estate on the basis that legal and beneficial ownership was never transferred from
Users to Torque;2.

The Liquidators are entitled to convert/realise Torque’s Trading Wallet Crypto Assets
into US Dollars in order to preserve and protect Torque’s assets and in light of the factthat the cryptocurrencies are highly volatile and speculative in nature; and3.

The Liquidators are entitled to reactivate Torque’s Personal Wallet functionality to allow
Users to withdraw these assets (which they have maintained legal and beneficial titlefor). It is unclear to the Liquidators what (if any) Crypto Assets continue to be held byUsers in Personal Wallets, but the Liquidators would like to reinstate this function as aprecaution.

If any creditors do not agree with the Liquidators’ assessment as set out above, they areencouraged to seek legal advice in relation to the Liquidators’ application.
B. Creditor Virtual Town Hall
Pursuant to section 183 of the Act, Liquidators appointed by the Court are not required to calla meeting of creditors unless 10 percent in value of the creditors of the Company give theLiquidators written notice requesting a meeting.
Although a formal meeting is not proposed at this time, the Liquidators hereby convene a
Creditor Virtual Town Hall at 4:00 p.m. Singapore time, on [2-3 weeks from now]. A web
link to the Virtual Town Hall will be circulated to all known creditors shortly.
The objective of the Creditor Virtual Town Hall is to provide an update on the liquidation,
present preliminary investigation findings to the extent that they are not commercially sensitive
and to outline next steps.
C. Request for Nominations for Ad Hoc Creditor Committee
The Liquidators hereby request creditor nominations to participate in an informal ad hoc
creditor committee (“Ad Hoc Creditor Committee”) for the Torque Liquidation.
The Ad Hoc Creditor Committee will not have any formal powers, however, will function as aconsultative body whereby members will be provided updates on the Liquidators’
investigations, be consulted with, and their views sought in respect of legal recovery
strategies. Membership on the Ad Hoc Creditor Committee will be an unpaid role and will
require creditors to sign non-disclosure agreements.
If you are a creditor of Torque and wish to nominate yourself as a representative of the Ad
Hoc Creditor Committee, please submit your nomination (“Nomination”) by email to the
Liquidators at torque@borrelliwalsh.com by no later than 5:00 p.m. Singapore time on[date 1 week before Creditor Town Hall].
For a creditor Nomination to be considered, it must meet the following criteria (“Nomination
Criteria”):

2Subject Line of Nomination Email1. Marked - “Torque Liquidation – Nomination for Ad Hoc Creditor Committee”
Body of Nomination Email2. Full KYC information including (a) first name, (b) last name, (c) date of birth and (d)nationality;
3. Claim value as at the Liquidation Date (18 March 2021) or as close a date aspracticable in original cryptocurrency and US Dollar equivalent;
4. Details of your credentials, experience, skill or profession and an explanation as towhy this will add value to the Ad Hoc Creditors Committee; and5. Full details in respect of any other creditors you represent including full KYC
information (set out at 2 above).
Whilst the Liquidators will endeavour to select members of the Ad Hoc Committee that are
representative of the mix of the full creditor body, they will only likely appoint 5 to 10 members
in total.
Whilst the Liquidators will be guided by the Nomination Criteria, the Liquidators reserve theirrights to accept or reject any creditor Nomination to participate in the Ad Hoc Creditor
Committee at their complete discretion. The Liquidators intend to notify the creditors selected
to be members of the Ad Hoc Creditors Committee at the Virtual Town Hall.
For any urgent customer, creditor and media enquiries, please contact the Liquidators at:
torque@borrelliwalsh.com.
Sincerely,

Jason Kardachi
Joint Liquidator
Torque Group Holdings Limited(In Liquidation)3