TECHTERYX LTD v. FIRST DIGITAL TRUST LTD AND OTHERS

HCA 161/2023 and HCA 1906/2023

(Heard together)

[2025] HKCFI 4023

HCA 161/2023

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 161 OF 2023

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_______________________

AND

HCA 1906/2023

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1906 OF 2023

_______________________

_______________________

(Heard Together)

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D E C I S I O N

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Brief Introduction and Background Facts

1.  TrueCoin LLC (“TrueCoin”) was the owner and creator of a platform through which it marketed a cryptocurrency (“TUSD”). Subscribers pay fiat currency in return for a newly minted TUSD digital token and are entitled to trade, use and redeem the token. The money collected from subscribers of tokens formed the reserves (“the Reserves”) which were marketed to be kept with and safeguarded by independent licensed financial institution in escrow in US dollar cash or equivalent assets in value at least equal to the total amount of outstanding tokens at any time. This was how TUSD was marketed as a “stable coin”.

2.  The Reserves were originally held by Legacy Trust Company Limited (“Legacy”) and since 2021 by First Digital Trust Limited (“FDT”), a licensed trust company. Both Legacy and FDT are companies incorporated in Hong Kong. Mr Vincent Chok (“Chok”) at all material times was a director in both Legacy and FDT.

3.  Legacy Trust engaged Crossbridge Capital Asia Pte. Ltd. (“Crossbridge”) as investment advisor pursuant to an Account Investment Management Mandate dated 31 March 2020. The key person at Crossbridge at the time was its CEO, Mr Yai Sukonthabhung (“Yai”).

4.  In around March 2020, Legacy and Crossbridge recommended TrueCoin to invest the Reserves into Aria Commodity Finance Fund (“Aria Fund”), incorporated in the Cayman Islands, as the investment fund. The voting shares of Aria Fund was held by Aria Capital Management Ltd which at all material times was exclusively controlled by Mr Matthew Brittain (“Brittain”).

5.  P acquired the business from TrueCoin on 2 December 2020 (“the Acquisition”) pursuant to two documents executed with TrueCoin: (1) the Strategic Alliance Agreement; and (2) the Master Services Agreement. However, TrueCoin continued serving and managing the TUSD platform for a fee.[1]

6.  During the course of the Acquisition, it was recommended to P that FDT should take over from Legacy. On 28 September 2020, FDT executed: (1) a Client Agreement (“Client Agreement”); and (2) Custody Services Agreement (“Custody Services Agreement”). Furthermore, on 13 January 2021, FDT entered into an Escrow Services Agreement (“ESA”) with P. These agreements provided inter alia that:

(1)  FDT is not acting as a financial or investment adviser to P and assumes no responsibility for the performance or outcome of any investment made by P on the basis of any advice provided nor takes any view on the efficacy or soundness of any investment decision made by P[2];

(2)  FDT’s role is a professional custodian[3]; and

(3)  FDT is authorised to refer P to a third party for the possible provision of service[4] and for FDT to appoint agents in connection with its performance of any services under the Custody Services Agreement[5].

7.  However, it is disputed whether those agreements acknowledged that FDT agreed to hold the Reserves as trustee and fiduciary of P which is P’s case[6]. On the other hand, FDT’s case is that whilst the Reserves are held to P’s order, it is not a trustee of the Reserves and the Reserves are not beneficially owned by P[7].

8.  It was also recommended to P that Finaport Pte. Ltd. (“Finaport”), a licensed investment manager, takes over from Crossbridge as investment advisor.

9.  On 18 March 2021, FDT appointed Finaport as the investment adviser with full discretionary authority to manage the Assets (defined as cash, securities and other assets which are under the custodial care of FDT) by a Discretionary Investment Management Agreement (“DIMA”)[8]. Under DIMA, Finaport was to make investment recommendations to FDT. It was not disputed that P had approved the appointment of Finaport and the terms of DIMA.

10.  Before the Acquisition, in around July 2020, Legacy had invested USD 97M in Aria Fund.

11.  By an Escrow and Properties Transfer Agreement dated 3 December 2020, TrueCoin and Legacy would transfer all assets standing in TrueCoin’s account at Legacy (“Escrow Assets”) to FDT[9].

12.  By a Joint Written Instruction dated 1 April 2021, TrueCoin and P instructed Legacy to transfer all Escrow Assets to FDT with effect on the same date.

13.  On around 14 March 2022, FDT and TrueCoin presented with P a resolution dated 8 March 2021 (FDT says it was a typo for 8 March 2022) whereby P was asked to authorize the investment of the Reserves according to an investment proposal that was annexed thereto (“the Board Resolution”). According to the investment proposal, Finaport was permitted to invest the Reserves in Aria Fund or “any other funds or structured products upon the recommendation of Finaport” and approved by P in writing. The Board Resolution was signed by a director of P.[10]

14.  From August 2022, P began demanding the redemption of the sums invested in Aria Fund but, save for USD 63.15M, the redemption request was not made.[11]

15.  In around late 2022, P via its solicitors started asking questions following the delays in the redemption. FDT provided some documents to P which revealed that by 6 transfers between 29 June 2021 to 15 March 2022, six remittances totalling USD 456M (“the 6 Remittances”) were transferred to a bank account held in the name of Aria Commodities DMCC (“Aria DMCC”), a Dubai entity, also owned by Brittain and/or his wife.

16.  The sole shareholder of Aria DMCC before August 2024 was Brittain’s wife. However, FDT points out that on P’s pleaded case, both Aria Fund and Aria DMCC are owned and controlled by Brittain[12]. It is also pleaded that Aria Fund and Aria DMCC are affiliate companies, part of the ARIA group of companies.[13]

17.  Essentially, P claims in HCA 161/2023 that there was a large-scale fraud against P, involving FDT, Finaport, Aria Fund, Aria DMCC, TrueCoin and one if its officer, Alex De Lorraine (“De Lorraine”).[14]

18.  However, FDT denies that it was involved in any fraud.[15] In particular, FDT relies on the fact that each of the 6 Remittances to Aria DMCC was authorised by De Lorraine before they were made[16] and in the Board Resolution it was inter alia resolved that Cindy Louie and De Lorraine were authorised on behalf of P to give instructions to FDT and any actions and instructions given by De Lorraine prior to the resolution were ratified, confirmed and approved etc.[17] There is also no dispute that the Board Resolution was signed by a director of P who is not alleged to be part of the fraud against P.

19.  On 28 February 2025, at an ex parte hearing before Justice Michael Black KC (“Justice Black KC”), P obtained inter alia the following orders from the Dubai International Financial Centre Court (“DIFC”) until the return date (“the 28 February 2025 Order”):

(1)  A proprietary injunction restraining Aria DMCC from disposing of, dealing with USD 456M transferred to it by Legacy and FDT and any traceable proceeds (“the Proprietary Injunction”);

(2)  A worldwide freezing order up to the same value covering its assets in or outside Dubai and any assets which Aria DMCC has power, directly or indirectly, to dispose or deal with as it were their own (“WFO”); and

(3)  Disclosure order directing Aria DMCC to disclose its assets worldwide that exceeds US$10,000, onward dealings of the 6 Remittances, current value and location of the sums received and their traceable proceeds from Legacy and FDT on affidavit together with the underlying documents.[18]

20.  On 18 March 2025, following an inter-partes hearing before Justice Black KC, the Proprietary Injunction and the WFO were continued with some variations (“the Varied Proprietary Injunction” and “the Varied WFO” respectively) to 14 May 2025 with a further return date on 12 May 2025[19].

21.  The orders made by Justice Black KC were again continued following the hearing on 12 May 2025 with a final return date on 21 July 2025: see “Reasons for the Order of H E Justice Michael Black KC Dated 16 May 2025 as Amended on 19 May 2025” (“May 2025 Reasons”)[20].

22.  P relies heavily on the evidence filed by Brittain in DIFC. In particular, according to the First Affidavit of Brittain (“Brittain 1^st”) filed on 14 March 2025 pursuant to the 28 February 2025 Order and to support Aria DMCC’s application to vary the orders made by Justice Black KC, it was stated inter alia that:

(1)  The 6 Remittances were made by FDT to Aria DMCC pursuant to a “trade finance facility”[21];

(2)  Only around December 2022, FDT discovered that the 6 Remittances were not recorded in Aria Fund and requested Aria DMCC to regularize the position. Various documents were executed mirroring those that should have been executed at the time of the 6 Remittances on the basis that each Remittance represented an investment in Aria Fund from the date it was made (“the Porting exercise”). Following the Porting exercise, the 6 Remittances were recorded as holdings in Aria Fund and Brittain believes the share register, maintained by the Fund Administrator, recording holdings in Aria Fund was adjusted accordingly[22]; and

(3)  Brittain sought to explain that the 6 Remittances were advanced to Aria DMCC and not to Aria Fund as it was FDT who requested the 6 Remittances to be made to Aria DMCC because FDT raised an issue with respect to the payment of sums to Glass Door Limited (“Glass Door”), said to be a related entity of FDT, which obtained introducers’ commission of around USD 15.5M in relation to investments made in Aria Fund and FDT complained that Aria Fund was taking too long to pay the commission[23].

23.  The Asset Disclosure List of Aria DMCC[24] provided to P on 16 March 2025 claimed that Aria Fund held investments including mining and coal resources companies in Tanzania and in Australia. P says that these are long-term illiquid assets whereas it was pitched to P that Aria Fund invested in short-term low risk assets.

24.  In Brittain’s 1^st, it was also mentioned that the assets of Aria Fund would be securitized in exchange for funds from third parties which could be used to meet P’s redemption requests (“the Securitization”).[25] P therefore urgently obtained on 14 April 2025 an ex parte injunction against Aria DMCC to prohibit the securitization proposal until the return date (“Securitization Injunction”)[26].

25.  As according to Brittain, Legacy and FDT were the only shareholders in Aria Fund, on 21 March 2025, P suggested to FDT to issue a statutory demand to wind-up Aria Fund in FDT’s name but had not done so.

26.  On 3 April 2025, P issued a statutory demand in the Cayman Islands against Aria Fund but this was met with an injunction restraining either P or FDT from petitioning to wind up.

27.  By Summons dated 6 May 2025[27] in HCA 161/2023 (“the Interim Receiver Summons”), P applies for the appointment of interim receivers over FDT’s rights, title and interest in the amount of USD 468M invested by FDT in Aria Fund. That application first came before DHCJ Gary CC Lam on 9 May 2025 who refused to give any relief but directed evidence to be filed and adjourned the Interim Receiver Summons for substantive argument[28].

28.  The following were filed in respect of the Interim Receiver Summons:

(1)  Fourth Affirmation of Li Jinmei (“Li 4^th”) on 16 May 2025 on behalf of P[29];

(2)  First Affirmation of Vincent Chok (“Chok 1^st”) on 11 June 2025 on behalf of FDT[30]; and

(3)  Fifth Affirmation of Li Jinmei (“Li 5^th”) on 8 July 2025 on behalf of P[31].

29.  By Summons dated 20 May 2025[32] in HCA 1906/2023 (“Proprietary Injunction and Joinder Summons”), P applied:

(1)  For leave to join Glass Door as the 6^th Defendant and leave to amend: (a) the Re-Amended Writ of Summons by adding Glass Door as a party and further amend the relief as per the draft annexed to the Summons; and (b) the Re-Amended Statement of Claim; and

(2)  A proprietary injunction against Legacy and Glass Door restraining the disposal of money transferred from Aria DMCC to two accounts in the name of Legacy held for the beneficial account of Glass Door in the total sum of USD 15.5M (“the “USD 15.5M”) from around July 2021 to around August 2022 or any traceable proceeds derived therefrom and ancillary disclosure orders.

30.  The Proprietary Injunction and Joinder Summons first came before me on 23 May 2025 and was adjourned to be heard together with Interim Receiver Summons with directions given for the filing of evidence[33].

31.  The following were filed in respect of the Proprietary Injunction and Joinder Summons:

(1)  Fifth Affirmation of Li Jinmei (“Li’s 5^th Aff”) on 22 May 2025 on behalf of P[34];

(2)  Affirmation of Tse Heung Ching Helen on 22 May 2025 on behalf of P[35];

(3)  First Affidavit of Grace Liu Ka Yue (“Liu’s Aff”) filed on 20 June 2025 on behalf of Legacy[36];

(4)  Affirmation of Yai Sukonthabhund (“Yai’s Aff”) on 4 July 2025 on behalf of Glassdoor[37]; and

(5)  Seventh Affirmation of Li Jinmei filed on 17 July 2025 on behalf of P[38].

32.  At the substantive hearing of the Interim Receiver Summons and the Proprietary Injunction and Joinder Summons:

(1)  Mr Li SC, leading Mr Ho and Mr Sik, appeared on behalf of P in both HCA 161/2023 and HCA 1906/2023;

(2)  Mr Parker SC, leading Mr Baker, appeared on behalf of FDT in HCA 161/2023 and Legacy in HCA 1906/2023; and

(3)  Ms Lok SC, leading Mr Kwan, appeared for Glass Door in HCA 1906/2023.

33.  Aria Fund and Aria DMCC wrote to seek to be excused from attending the hearing before me given that there were pending applications taken by them to contest the jurisdiction of the court over them. Their attendance was excused by me.

Applicable Principles

34.  The court has power to appoint interim receivers and managers under s.21L of the High Court Ordinance, Cap. 4 in all cases in which it appears to the Court to be just or convenient to do so.

35.  The following applicable principles were not seriously disputed:

(1)  The power to appoint receivers is a discretionary power to be exercised flexibly on a similar basis to that of an interlocutory injunction, and the principles in American Cyanamid apply. The court has to assess and balance the following matters: (a) whether there is a serious question to be tried; (b) the alleged risks of dissipation of assets; (c) the current protective regime and its efficacy; and (d) the risk of damage to the defendants and the company if the appointment is made, and whether they can be adequately compensated by a cross-undertaking in damages;

(2)  The court will take into consideration factors such as whether there is jeopardy to assets, whether some form of interim protection is required to preserve the status quo, whether some other less invasive form of protection suffices and the balance of convenience;

(3)  The court should take whichever course which appears to carry “the lower risk of injustice if it should turn out that it is wrong”;

(4)  Appointment of interim receiver is a drastic remedy and the court has to consider the adverse consequences of receivership to the defendant and any third parties which may be affected. Where a company with an active trading business as opposed to an asset holding company is concerned, the appointment of receivers has more adverse effect;

(5)  A receiver will not be appointed if the appointment would be fruitless for example there is no property which can be reached in law or equity. However, a receiver may be appointed if there is a reasonable prospect that the appointment will assist in the enforcement of a judgment or award or there is a real prospect that the appointment will serve a useful purpose; and

(6)  If it would not be just and convenient to grant an injunction then a fortiori a receiver should not be appointed.

See e.g.: China Shanshui Investments Co Ltd v Zhang Caikui [2017] 5 HKLRD 240, §§6-9, 35 per Godfrey Lam J (as he then was); Vasily Trubnikov v Julimar Management Limited & Ors [2025] HKCFI 575, §§25-26 per Linda Chan J; Re Zealot & Co Ltd [2008] 1 HKLRD 386, §§34-35 per Kwan J (as she then was) and Dragon Success Enterprises Limited v Aeso Holdings Limited (unrep) HCMP 1647/2017, 4 September 2017, §§15-20 per Au-Yeung J; JSC BTA Bank v Mukhtar Kabulovich Ablyazov [2014] 5 HKC 209, §§24-25 per Zervos J (as he then was) and Steven Gee QC, Commercial Injunctions, §16-008.

36.  As for the applicable principles for the grant of proprietary injunction, these are well-established and were also not disputed. For the grant of a proprietary injunction, there are three requirements: (1) there is a serious issue to be tried on the merits; (2) that the balance of convenience lies in favour of the injunction; and (3) it is just and convenient to grant the injunction.

37.  The threshold of “serious issue to be tried” is not a very steep hurdle but if the opposing party seeks to show that there is no serious issue to be tried, the threshold is high as it would be necessary to demonstrate that the claim should be struck out. Furthermore, it is not necessary to show any risk of dissipation of assets although if such risk is demonstrated, it may be an additional factor in favour of the grant of injunction. Nor is it necessary to show that damages would not be an adequate remedy. However, it remains necessary to demonstrate that the balance of convenience favours the granting of the injunction, and that it would be just and convenient to do so. It would not be granted if a monetary award would be adequate remedy for the plaintiff. In particular, where the proprietary claim of the plaintiff is not to any specific real or personal property but to money, the plaintiff can be adequately compensated by a monetary award, unless there is evidence which calls into question the ability of the defendant to meet the award for damages, so that a proprietary injunction is not necessary or justified. See e.g.: Predicine Holdings Ltd v Bianchi (Hong Kong) Limited & Ors [2021] HKCFI 123, §§69-73 per Coleman J; Zhang Yan & Ors v ASA Bullion Limited [2019] HKCFI 179, §11 per Recorder Eugene Fung SC; and DBS Bank (Hong Kong) Limited v Tian Wen Quan (unrep), HCA 3228/2016, 12 October 2017, §§11-18 per Anthony Chan J.

Discussion

Re: Interim Receiver Summons

38.  As between P and FDT, it was not disputed that there is a serious issue to be tried on the merits. I take the view as there is a serious issue to be tried on P’s case that the 6 Remittances to Aria DMCC was pursuant to a fraud perpetrated on P, and it is not disputed that the 6 Remittances were not transferred to Aria Fund as discovered by FDT in December 2022[39], and given the documentation adduced in support of the Porting exercise into Aria Fund appears incomplete, internally inconsistent and questionable[40], plainly the USD 456M (and its traceable proceeds) requires protection pending the determination of the parties’ dispute at trial.

39.  However, the crucial question is whether the preservation of the status quo, bearing in mind the relief already granted and continued by Justice Black KC until further order, requires the appointment of receivers over FDT’s interest invested into Aria Fund.

40.  In P’s Skeleton Submissions, essentially, it was submitted that it is just and convenient to appoint a receiver for the following reasons:

(1)  It is necessary in view of the risk of dissipation of assets, in particular when Brittain, as controller of Aria Fund, has insisted on pursuing with the “securitization”;

(2)  Injunctive relief against Aria Fund is inadequate to protect P’s assets as Aria Fund is not subject to the proceedings in DIFC and the injunctions obtained there, and further, there is no evidence showing how assets are held by Aria Fund;

(3)  FDT’s proposal to assign its interest in Aria Fund to P does not work: (a) consent of Aria Fund for the assignment needs to be obtained and in view of the fact that Aria Fund had been using alleged know your client and anti-money laundering concerns to restrict redemption, it follows that it would not consent to the assignment; and (b) it is not clear what P would be assigned given the conflicting documents from FDT itself as to what its interest in Aria Fund is;

(4)  Appointment of a receiver would not cause monetary damage to FDT who has no interest in the Reserves which is held for the benefit of P and in turn for the TUSD token holders;

(5)  Any reputational injury would be self-inflicted as FDT could have consented to receivership. There would not be any effect on FDT’s general business or general reputation; and

(6)  P cannot rely on FDT to safeguard the purported investment in Aria Fund given cogent evidence that FDT participated in the fraud to misappropriate the Reserves, the Porting exercise, providing two sets of inconsistent subscription documents and dragging its feet in seeking redemption against Aria Fund.

41.  In respect of (1), I do not accept that with the Injunctions granted and continued by Justice Black KC that there is any need for interim relief by the appointment of a receiver to prevent any dissipation of the USD 456M or its traceable assets. A receiver should not be appointed where the existing protective regime is effective to protect P’s interest which I am of the view is plainly the case here.

42.  In the May 2025 Reasons[41], in relation to the Proprietary Injunction, it was clarified that Aria DMCC is also “restrained from causing, permitting or encouraging any third party presently with custody or control of the assets in any way disposing, dealing with or diminishing the value of the same. Thus, it may be said that [Aria] DMCC is restrained from causing, permitting or encouraging [Aria] Fund to dispose of, deal with or diminish the value of the assets. It appears that at least 80% of the assets are directly derived from the Six Remittances. … This is the proprietary injunction. In addition to the proprietary injunction, there is the Freezing Order. The Freezing Order is not limited to assets derived from the Six Remittances but extends to all of [Aria] DMCC’s assets up to the value of USD 456 million. [Aria] DMCC’s assets include assets whether or not they are in its own name and whether they are solely or jointly owned. [Aria] DMCC’s assets include any asset which it has the power, directly or indirectly, to dispose of or deal with as if it were its own. [Aria] DMCC is to be regarded as having such power if a third party holds or controls the assets in accordance with its direct or indirect instructions. Given the obscurity of the evidence concerning the ownership and control of the various trading entities, it is possible that [Aria] DMCC does have the power to control the assets.” As P’s pleaded case is that both Aria DMCC and Aria Fund are owned and controlled by Brittain, the Injunctions should cover the assets of Aria Fund.

43.  Furthermore, I am not satisfied that the appointment of receivers over FDT’s investment would prevent the securitization or other use of the assets by Aria Fund. The appointment of receivers does not have proprietary effect[42] and any receiver appointed over the interest held by FDT cannot be in a better position than FDT itself. On P’s own case, USD 456M was never invested into Aria Fund by FDT. In any event, it is simply not demonstrated how as an investor in Aria Fund, FDT would be able to dictate what Aria Fund does with its assets.

44.  In respect of (2), given the clarification by Justice Black KC as mentioned above, it is doubtful whether Aria Fund (or at least its assets) is not subject to the Injunctions ordered by Justice Black KC. Even if I am wrong and Aria Fund is not bound by the orders made in DIFC, I do not accept that P could not obtain injunctions to protect its interest in the Cayman Islands or elsewhere. On P’s own case of fraud, Aria Fund is and was never a genuine investment and the 6 Remittances were fraudulently transferred to Aria DMCC. As a victim of fraud, P should have a direct proprietary claim over the assets of Aria Fund and/or Aria DMCC in so far as the USD 456M or its traceable assets are held by them or under their control (as discussed in further details below at paragraph 58). Thus P should be able to directly (in its own shoes) seek injunctive relief against Aria Fund in the Cayman Islands or elsewhere even if Aria Fund is not subject to the Dubai proceedings. There is thus no utility to appoint receivers over FTP’s interest when it can itself take steps to protect or safeguard what it says are its assets.

45.  Whilst Mr Li submitted that there is no evidence showing how the traceable assets are held by Aria Fund (the only evidence lies in the Asset Disclosure List which was not supported by underlying documents) and that this somehow prevents P applying for injunctive relief in the Cayman Islands, this is contrary to P’s evidence that it is contemplating recourse against Aria Fund in the Cayman Islands and that there is likely still approximately USD 45.5M sitting within Aria Fund[43]. In any event, no legal opinion was adduced to suggest that P is not able to apply for relief against Aria Fund in the Cayman Islands and it was not suggested that this was why it did not and cannot make any application for an injunction there.

46.  In respect of (3), given that I take the view that the status quo is sufficiently preserved, and even if it is not, it can be preserved by P applying for injunctions rather than by the drastic appointment of a receiver, I do not have to consider whether FDT’s offer to assign its interest in Aria Fund to P is workable and would be less invasive/intrusive than the appointment of a receiver.

47.  In respect of (4) and (5), on the question of adverse effect on FDT, whilst I accept to some extent Mr Li’s submissions that any “stigma” attached to and any adverse effect of the appointment of a receiver which is only limited to FDT’s interest in the USD 456M invested into Aria Fund (and not all assets and undertakings of FDT) should not be overstated and be considered in its proper context, I also accept Mr Parker’s submissions that with the recent statements by Justin Sun that FDT is insolvent and the demonstrated drastic effect on the value of FDT’s stable coin[44], it is not fanciful to believe the appointment of a receiver may be perceived as indicating FDT is insolvent and give credence to what Justin Sun has been claiming in his social media posts. This would cause loss and damage to the goodwill and reputation of FDT which may not be readily quantifiable: see Dragon Success Enterprises Limited v AESO Holding Limited (unrep) HCMP 1647/2017, 4 September 2017, per Au-Yeung J at §§18-20 and Re Full Billion Shipping Ltd [2003] 2 HKLRD 674 per Chu J (as she then was) at §§48-50.

48.  In respect of (6), even if FDT cannot be relied upon by P to protect its interests in the USD 456M, as already mentioned, I take the view that P does not need to rely on FDT’s interest and can in its own right take action against Aria Fund in the Cayman Islands or elsewhere. Besides, if on P’s case the 6 Remittances were never invested into Aria Fund but were fraudulently transferred or dissipated to Aria DMCC, then FDT (and receivers appointed over FDT’s right) has no right or interest to claim that the USD 456M was invested into Aria Fund. There is no utility to appoint receivers where the supposed chose of action held by FDT does not exist.

49.  The appointment of receivers would also not realistically enable a winding-up petition against Aria Fund to be brought (in view of the injunction of the Grand Court of Cayman which considered, as a result of Article 156 of Aria Fund’s articles of association, P and FDT would not be permitted to present a winding up petition[45]). Besides, P’s case is that it is not precluded from winding up Aria Fund on just and equitable grounds[46]. It follows that the appointment of a receiver has no utility.

50.  Furthermore, I would accept Mr Parker’s submissions that it is not demonstrated that the appointment of a receiver would be able to “investigate” or assist the tracing exercise, over and above what FDT and Kroll (who had been instructed by P to prepare a report analyzing the documentation and information provided in the Dubai proceedings and has produced a 485-page report on 1 May 2025[47] ) has been and is able to do. Mr Parker also points to the fact that as a result of an Originating Motion for Inspectorship of Aria Fund in the Cayman Islands, Campbells LLP for Aria Fund shared a bundle of documents with P[48]. Moreover, disclosure orders were obtained in DIFC including further disclosure orders on 16 May 2025 requiring Aria DMCC to provide “unredacted copies of [its] bank statements in respect of all of its accounts with [the defendant banks] which show the onward dealings with the monies paid to it by [FDT and Legacy][49] although it seems that has not been complied with[50].

51.  In all, I am not satisfied that it is demonstrated how the status quo is better preserved pending trial by the appointment of receivers. Balancing all the relevant factors, and taking into account all the submissions made by counsel, taking the course which carries the lower risk of injustice if I was wrong, I am of the view that it is not just and convenient for a receiver to be appointed.

Re: Proprietary Injunction and Joinder Summons

52.  P asserts a proprietary claim over the USD 15.5M allegedly received by Glass Door from Aria DMCC which on its case formed part of the traceable proceeds of the 6 Remittances (i.e. the USD 456M). The USD 15.5M is on P’s case illicit kick-backs that would benefit FDT, Chok and Yai in the misappropriation/diversion of the Reserves to Aria DMCC. P does not accept Glass Door’s case that they were introducer’s commissions. Alternatively, P claims that Glass Door received the USD 15.5M as knowing recipient or it dishonestly assisted in the breach of fiduciary duty of FDT, Legacy (through Chok) and Finaport (through Yai) in directing Aria DMCC to pay the USD 15.5M to Glass Door.[51]

53.  On the other hand, Glass Door’s evidence, in opposing P’s application for proprietary injunction and ancillary relief, can be summarized as follows:

(1)  Yai is the sole member and alternative director of Glass Door[52];

(2)  He has never been employed by Legacy nor FDT but has been FDT’s consultant[53];

(3)  The actual sums paid to Glass Door by Aria DMCC was USD 11.6M odd and not USD 15.5M as claimed by Brittain[54];

(4)  The payments represented “introducer fees” paid by Aria DMCC to Glass Door for services rendered by Yai in introducing investors to Aria Fund and were authorized by: (a) the DIMA; (b) the Fund’s May 2020 Private Placement Memorandum; and (c) an Introduction Services Agreement dated 11 March 2020 between Glass Door and Aria Fund[55];

(5)  Glass Door had introduced Legacy to Aria Fund in March 2020 and following that introduction, Legacy and later FDT invested in the Aria Fund[56];

(6)  The 15 invoices of Glass Door in connection with FDT’s investments were paid by Aria DMCC (being entities within the same group as the Aria Fund) to Glass Door’s custody account with Legacy[57]; and

(7)  Fees paid to Glass Door were transferred to Legacy’s custody account to be held for its benefit.[58]

54.  Ms Lok submitted that P has no proprietary rights over the USD 15.5M and this alone is fatal to the application for proprietary injunction against Glass Door. She heavily relied upon what was represented in:

(1)  Clause 5 of Escrow Services Agreement between Legacy and TrueCoin dated 27 June 2019: “[Legacy] shall hold and manage the Escrow Amount as a fiduciary for the benefit of [TrueCoin]. For the avoidance of doubt, [TrueCoin] shall have no proprietary rights in the Escrow Amount and shall hold the Escrow Amount exclusively for the benefit of the Holders”[59];

(2)  Clause 6 of the ESA: “Escrow Amount: FDT shall hold and manage the Escrow Amount as a fiduciary for the benefit of [P] or its agents or designees. For the avoidance of doubt, [P] shall have no proprietary rights in the Escrow Amount and shall hold the Escrow Amount exclusively for the benefit of the Holders.”[60]; and

(3)  Notes 2 and 3 of the TrueUSD Holdings Report published on 25 June 2025: “The USD denominated collateral held in accounts are the total balance in account held by [P] at a Hong Kong depository institution and Bahamian depository institutions for the benefit of the TrueUSD token holders… [P] and the agents are not entitled to any funds at any time and no amounts deposited into the accounts shall become the property of [P], the agents, or any other entity, or be subject to any debts, liens or encumbrances of any kind of [P], the agents or any entity.”[61]

55.  On the other hand, Mr Li also submitted a number of other contractual clauses demonstrate that the Reserves held in the escrow account were held for P beneficially as fiduciary, custodian and escrow agents for P. He relied on the following:

(1)  Clause 4.1 of Client Agreement: “… as between [P] and FDT, [P] shall be deemed to be and is transacting solely as principal…”[62];

(2)  The definition of “Property” under the Custody Services Agreement as “all or any part of any Securities, Digital Asset, Cash, or any other property that have been delivered to FDT to be held by FDT on [P]’s behalf”[63];

(3)  Clauses 4.1 and 4.2 of the Custody Services Agreement whereby FDT appointed by [P] to set up records of account for the deposit of Property (defined as “Custody Account”) that FDT may receive from P[64];

(4)  Clause 6.1 of Custody Services Agreement: “FDT shall on its records identify each Custody Account in the name of [P] or such other name as [P] may reasonably designate. Custody Account is to be designated to show that the Property belongs to [P] and is segregated from FDT’s own assets and those of the other clients of FDT”[65];

(5)  Clause 6.2 of Custody Services Agreement which provides FDT must segregate assets so that the Property shall not become available to insolvency administrators or creditors of FDT and FDT shall identify the Property on its records in a manner to show they belong to P or its customers[66];

(6)  Clause 13.1 of Custody Services Agreement which provides: “FDT shall perform its obligation with due skill, care and diligence as determined in accordance with the standards and practices of a professional custodian for hire in the markets or jurisdiction in which FDT performs services under this Agreement and maintains Property for [P][67];

(7)  Clause 14 of Custody Services Agreement which provides P agrees that it shall be solely responsible as principal for all obligations to FDT and agrees that its clients will have no direct rights against FDT and FDT shall have no liability to P’s underlying customers[68];

(8)  Clause 1 of ESA which provides in case of inconsistency, the Client Agreement and Custody Services Agreement prevails[69];

(9)  Clause 3(a) of ESA which provides during escrow period FDT will act as agent of P for the receipt of Funds purchaser of tokens and upon receipt of Funds, FDT will hold Funds as fiduciary of P to the order of P[70];

(10)  Clause 4(f) of ESA which provides upon a Triggering Event, a resulting trust shall be deemed to have arisen in favour of holders of tokens[71];

(11)  Clause 6 of ESA[72] (see above at paragraph 54(2)); and

(12)  Clause 12 of ESA which provides that FDT only acts as escrow agent and is not involved with the business decision or activities of P or any holders of token[73].

56.  Mr Li submitted that the most natural reading of the above clauses is that FDT holds the Reserves on trust for P who in turns holds the Reserves on a sub-trust for the TUSD token holders. I am clearly of the view there is a serious issue raised whether on the proper construction of these agreements, P held any beneficial interest in Reserves that were transferred to FDT.

57.  Besides, from the above contractual clauses, it is reasonably arguable that there was a fiduciary relationship between P and FDT such as to give rise to a constructive trust: see 廈門新景地集團有限公司 v Eton Properties Limited & Ors (2020) 23 HKCFAR 348 per Lord Sumption NPJ at §174.

58.  Furthermore, another viable route to P’s proprietary interest is based on constructive trust. It is well-established that when property is obtained by fraud, equity imposes a constructive trust on the fraudulent recipient, so that the money is recoverable and traceable in equity: see Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 716C-D; Mesirow Financial Administrative Cooperation v Best Link Industrial Co Limited (unrep) HCMP 1846/2015, 25 January 2016 per Recorder Lisa Wong SC (as she then was) at §33; Guaranty Bank and Trust Company v Zzzik Inc Limited (unrep) HCA 1139/2016, 18 July 2016, per DHCJ Cooney SC at §28; and Pacific Rainbow International v Shenzhen Wolverine Tech Ltd & Ors [2023] HKCFI 1292, per Au-Yeung J at §§18(1) and 34. Such constructive trusts provides proprietary relief: see Pacific Rainbow International at §34 and Zief Incorporated v Tekchandani Ajai Mohan [2021] 3 HKC 69 per Recorder Eugene Fung SC at §48.

59.  Given that I have held that there is a serious issue to be tried on P’s case that the USD 456M was fraudulently transferred to Aria DMCC, if there is a serious issue to be tried that the USD 15.5M was remitted out of the USD 456M (or its traceable proceedings) to Glass Door and that has been retained by Glass Door, that is sufficient to demonstrate P has a proprietary claim over the USD 15.5M.

60.  However, in Li’s 5^th Aff, it was accepted by P that:

(1)  From Brittain’s evidence, the 8 invoices issued by Glass Door to Aria DMCC from July 2021 to August 2022 (“the Glass Door Invoices”)[74] added up to only USD 8,489,506.66 and did not add up to USD 15.5M[75]; and

(2)  P is not able to corroborate any of the referral fees described in the Glass Door Invoices with the disclosed bank statements of Aria DMCC provided by Brittain[76].

61.  Furthermore, according to Legacy, the total sum standing to the credit of Glass Door’s account with Legacy is less than USD 20,000[77].

62.  As explained by Recorder Eugene Fung SC in Welly Grace Limited & Ors v Keung Yee Man & Ors [2023] HKCFI 3082, the function of a proprietary injunction is to preserve the property in the defendant’s hands which is said to belong to the plaintiff. Specifically, in the context of obtaining a proprietary injunction, the plaintiff needs to demonstrate a serious issue to be tried in relation to his proprietary claim, which would involve not only a consideration of the merits of the claim brought by the plaintiff, but also an examination of the tracing exercise pursuant to which the asset in question has been identified. As far as the tracing exercise is concerned, the plaintiff should adduce reasonable evidence to show a serious issue to be tried that the asset or its traceable substitute is being held by or under the control of the defendant (see §§24-30).

63.  Firstly, I am of the view that there is no reasonable evidence to show there is a serious issue to be tried that the USD 15.5M was remitted to Legacy’s accounts apart from the bare assertion of Brittain which is not supported any reasonable documentary proof. P admits that the Glass Door Invoices do not add up to USD 15.5M and in any event the invoices cannot be corroborated with Aria DMCC’s bank statements. Glass Door has only admitted to receiving USD 11.6M odd. Mr Li acknowledged that the evidence at the moment was incomplete.

64.  Secondly, even if I was wrong, there is a lack of reasonable evidence that what remains in Glass Door’s account with Legacy (less than USD 20,000 according to Legacy) or accounts held by Legacy is derived from the USD 456M or its traceable proceeds. Whilst Mr Li submitted that Legacy has failed to produce a single bank document how Glass Door’s commissions had been applied and has not said the commissions do not remain in Legacy’s bank accounts, with respect, that seems to reverse the onus of proof. It is for P to demonstrate by reasonable evidence that there is a serious issue to be tried that Legacy is holding the traceable proceeds of the USD 456M and the amount that is being held by Legacy. See Orion Engineered Carbons GMBH v Gan Yuqi & Ors [2025] HKCFI 2992 per Cheng J at §12.2. As explained by Recorder Eugene Fung SC in Milestone Electric, Inc v Meihoukang Trading Co Limited [2020] HKCFI 2542 at §§14-15, to obtain proprietary relief in relation to assets transferred to a defendant or assets derived from it, the plaintiff must established the assets claim can be identified by the tracing process as representing the original trust property.

65.  Furthermore, I accept Ms Lok’s submission that the alternative claims of knowing receipt and dishonest assistance do not sound in proprietary remedy: see Sinclair Investment Holdings S.A. v Versailles Trade Finance Limited [2007] EWHC 915 (Ch), §§109-135 and DBS Bank (Hong Kong) v Tian Wen Quan (unrep) HCA 3228/2016, 12 October 2017 at §30 per Anthony Chan J.

66.  I would therefore dismiss the application for proprietary injunction against Glass Door.

67.  As for the injunction against Legacy, given that I have taken the view there is no reasonable evidence adduced to demonstrate a serious issue to be tried that what sums held by Legacy in its bank accounts are the traceable proceeds of the USD 456M, there is also no basis for seeking a proprietary injunction against Legacy.

68.  Even if I was wrong, in the present case it is clearly not just and convenient to grant the injunction against Legacy. I accept Mr Parker’s submissions that restraining USD 15.5M or its traceable in the ANZ and ICBC accounts of Legacy will cause prejudice to Legacy given that they are “omnibus accounts” that holds balances of hundreds of its other clients and it would be disruptive to Legacy’s business operations.[78]

69.  Lastly, in any event, proprietary injunctions should not be granted against Glass Door and Legacy, as any proprietary claim of P is clearly not to any specific real or personal property but to money, for which P can be adequately compensated by a monetary award, unless there is evidence which calls into question the ability of Legacy to meet the award for damages, a proprietary injunction is not necessary.

70.  As no proprietary injunction should be granted, it follows I would not make any orders for ancillary disclosure against Glass Door and Legacy.

71.  As for P’s application for leave to join Glass Door as a party and re-amend the Statement of Claim in HCA 1906/2023, although I am of the view that there is no serious issue to be tried in respect of P’s proprietary claim to USD 15.5M, P also relies on claims based on knowing receipt and dishonest assist in breach of trust[79].

72.  For an action for knowing receipt, the following must be pleaded:

(1)  That there has been a disposal of the plaintiff’s assets in breach of trust or fiduciary duty;

(2)  The defendant has beneficially received assets which are traceable as representing the plaintiff’s own assets; and

(3)  The defendant has knowledge that the assets he received are traceable to a breach of fiduciary duty or breach of trust.

See: Bullen & Leake & Jacobs’ Hong Kong Precedents of Pleadings, 3^rd Edn, §25-07.

73.  As for an action for dishonest assistance, the following must be pleaded:

(1)  That there has been a disposal of the plaintiff’s assets in breach of trust or fiduciary duty;

(2)  In which the defendant has assisted or which he has procured;

(3)  The defendant has acted dishonestly; and

(4)  Resulting in loss to the plaintiff.

See: ibid, §25-09.

74.  I have already held that there is no serious issue to be tried that the USD 15.5M was received by Glass Door and was the traceable proceeds of the USD 456M. This is fatal to a claim in knowing receipt where receipt is the gist of the action: see Novoship (UK) Ltd v Mikhaylyuk & Ors [2015] QB 499 (CA) 528 at §89.

75.  Furthermore, whilst there is a one liner that Glass Door “received the Secret Payments as a knowing recipient or dishonestly assisted the aforementioned breach of fiduciary duty, and is liable to account for the Secret Payments as constructive trustee and/or for equitable compensation”[80] , I am of the view that there is no sufficient plea of the facts or particulars of: (1) the knowledge of Glass Door that the USD 15.5M paid by FDT to Aria DMCC was in breach of fiduciary duties; and (2) Glass Door acted dishonestly. More objectionable is the lack of particulars of the plea of dishonest assistance of Glass Door: see Hong Kong Civil Procedure 2025, Vol.1, §18/12/12 and Kwong Yi Ling v Lau Kwun Leung & Ors [2021] HKCFI 2303 at §24 per Linda Chan J.

76.  The proposed claims based on knowing receipt and dishonest assistance are liable to be struck out.

77.  In the circumstances, I am not satisfied that there is a bona fide claim by P against Glass Door and a proper question to be tried between P and Glass Door such that joinder is necessary, just and convenient for the resolution between them as well as P and the Defendants in HCA 1906/2023.

78.  I would therefore refuse leave to join Glass Door as a new party and the amendments as per the Draft RASOC.

Disposition and Orders

79.  Accordingly, I dismiss both the Interim Receiver Summons and the Proprietary Injunction and Joinder Summons.

80.  Costs should follow the event. I make a costs order nisi that:

(1)  P should pay to FDT the costs of the Interim Receivers Summons, with certificate for two counsel, to be summarily assessed, if not agreed;

(2)  P should pay Legacy’s costs and Glass Door’s costs of the Proprietary Injunction and Joinder Summons, with certificate for two counsel, to be summarily assessed, if not agreed;

(3)  The above costs order nisi shall become absolute in the absence of any application to vary within 14 days from the handing down of this decision; and

(4)  If there is no application to vary the above cost order nisi, FDT, Legacy and Glass Door should lodge and serve their respective Statement of Costs within 14 days from the handing down of this decision and P should lodge and serve its objections within 7 days thereafter. There shall be summary assessment of costs on paper.

81.  Lastly, it remains for me to thank all counsel for their helpful assistance.