Kim Dotcom-promoted bitcoin business Bitcache placed in liquidation

Kim Dotcom. Photo / Newstalk ZB

A crypto business promoted by Kim Dotcom - which he once billed as a firm that would be worth “billions” - was placed in liquidation by a High Court order this morning.

Lawyer Phil Creagh - a Bitcache director until 2020 - brought the application.

Creagh is a partner at Anderson Creagh Lai - now part of Hamilton Locke - the Auckland law firm that became Dotcom’s law firm in 2014 after Simpson Grierson dropped the Megaupload founder. Months later, it emerged that Dotcom owed Simpson Grierson $2 million. In April 2021, Anderson Creagh Lai applied to remove itself as Dotcom’s solicitor on the record.

“At Mr Dotcom’s request, the firm made Mr Creagh a director of Bitcache Limited, and the amount owing is for unpaid director’s fees in the sum of $231,653.03,” an Anderson Creagh Lai spokeswoman said.

The Herald understands a second former director is owned a similar amount. Those who participated in a $5m crowdfunded equity raise are also out of pocket.

Bitcache was not represented at the hearing.

Insolvency Management principal Iain Nellies was appointed liquidator.

In October 2016, Dotcom - through Twitter - promoted an effort that raised close to $5m through a Cayman Islands-registered crowd-funding site called BNK to the Future. The funds were earmarked for a project that Dotcom billed as Megaupload 2.0/Bitcache.

The website for the raise said, “Due to his ongoing legal disputes with the US government, Kim Dotcom is not the owner of the companies [sic] but the company’s [sic] evangelist.”

Dotcom said Bitcache would come to dominate cryptocurrency by offering - according to BNK to the Future promotional material - “custom technology built on top of bitcoin” that would allow for “bitcoin microtransactions” to pay for internet content or services.

But just 90 minutes before the new service was due to launch, on January 21, 2017, the entrepreneur postponed the big reveal.

Dotcom tweeted, “Sorry but there has been an unexpected hiccup. Will tell you all about it later today. Let this play out and give me some time to update you.”

He followed with a tweet stating calling the problem a “roadblock” that would take “a day or two” to resolve. Its status was “top secret”.

In the event, that was Dotcom’s final post on Bitcache.

The Companies Office lists 10 shareholders in Bitcache - all based in the Cayman Islands, the Cook Islands or Hong Kong.

Creagh resigned from Bitcache’s board in September 2020.

Ahead of the liquidation, the Companies Office listed a single Bitcache director: Auckland man Mark Hubble. Hubble, who could not be immediately reached for comment, is also a director of Radius Recruitment, which according to its website recruits candidates from the Philippines for roles in NZ.

Hubble was also the sole director of Reuben Sims Labour, which was placed in liquidation in January 2021.

Creagh could not be immediately reached for comment today. Earlier, he declined questions.

Dotcom did not respond to a request for comment.

The Megaupload founder has been fighting extradition to the US since his January 2012 arrest on criminal copyright infringement, money laundering, racketeering and wire fraud charges.

Last month, co-accused Bram van der Kolk and Mathias Ortmann were sentenced to two years and six months and two years and seven months in prison respectively.

The sentences were handed down after substantial discounts from around 10 years for guilty pleas, assistance to the FBI and rehabilitation efforts.

The third co-accused, Finn Botato, died from cancer in June last year.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.