After the hearing, a spokeswoman for Creagh’s law firm, Anderson Creagh Lai, said the application was brought over “unpaid director’s fees in the sum of $231,653″.
The first liquidator’s report said Bitcache owed $1.2m to three creditors.
Three creditors are listed: Creagh (both as an indirect creditor and a director creditor), plus Creagh’s law firm and Puai Wichman (both indirect).
Including a share capital of $21.5m, there is a total deficit estimated deficit of $22.7m, the reports said.
The Companies Office listed 10 shareholders in Bitcache before its liquidation - all based in the Cook Islands, Cayman Islands or Hong Kong. Nellies told the Herald the shareholding companies were trusts. “I’m still investigating who has ultimate ownership,” he said. He could not comment further at this time.
The report gives a Rarotonga PO Box address for Wichman.
His LinkedIn profile says he is founder and chairman of Ora Partners, saying “He has helped a great number of high net worth clients capitalise on the Cook Islands’ favourable legislation and location.”
The $5m crowdfunded equity drive for Bitcache involved a Cayman Islands-based platform, but also involved entities registered in the Cook Islands: : MC2 LLC (easily the largest Bitchache shareholder, with a 47 per cent stake), Bitcache Holdings LLC and Dark Energy LLC.
“The company traded as a software developer of a crypto currency scheme and was set up in 2016 by Kim Dotcom who acted as a director for some seven months,” the first report by liquidator Insolvency Management principal Ian Nellies said.
“Subsequently two professional directors were appointed although the liquidator is advised Mr Dotcom still held an active interest in the running of the business.”
One of the directors was Creagh, who resigned in 2020. The other was Mark Hubble, the Auckland-based director of Radius Recruitment, which according to its website recruits candidates from the Philippines for roles in NZ.
Hubble was also sole director of Reuben Sims Labour, placed in liquidation in January 2021. Hubble advised Nellies that he resigned in March - but as shareholders did not replace Hubble, the liquidator regards him as the sole director, if not an acting director.
The report indicates Nellies has his work cut out. The liquidator lays questions he needs to answer, from the basics - When did the company cease trading? - to whether any related-party transactions occurred.
The liquidator says investigations will include a review of the following:
- “Transactions with emphasis on those giving any preferential effect and those at an undervalue or excessive value, that may increase the recovery available for the creditors.”
- “Actions of the management of the company to establish whether or not there have been breaches of the Companies Act 1993 or other legislation requiring reporting to the relevant authorities.”
Nellies said he would review management and directors’ conduct, in accordance with “normal practice”.
It was too early to say if any funds could be recovered. There were no physical assets. Nellies had yet to ascertain if the firm’s trademark, or the software it developed, had any value.
Auckland-based Anderson Creagh Lai - now part of Hamilton Locke - 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.
Bitcache was not represented at the liquidation hearing.
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 an hour-and-a-half before the new service was due to launch on January 21, 2017, the entrepreneur postponed the big reveal.
Dotcom followed with a tweet 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.
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.
On June 15, 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.