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SINGAPORE – Singaporean businessman Bernard Ong Hock Fong, who founded the now-collapsed cryptocurrency trader Torque, has been sued by the liquidators of Torque in the High Court to recover hundreds of millions worth of cryptocurrency that were lost under his watch.
In a suit filed on May 5, the liquidators alleged that Mr Ong, 36, had failed in his duties as the sole director and chief executive of Torque Group Holdings (Torque), which caused substantial losses of investors’ funds and eventually the total collapse of its online cryptocurrency trading platform in 2021.
Mr Ong has filed an intention to contest the lawsuit.
Torque, which is in liquidation, and its joint liquidators, Mr Jason Aleksander Kardachi and Ms Elaine Hanrahan, are represented by Mr Yam Wern-Jhien, director and co-founder of Setia Law.
Torque was incorporated in the British Virgin Islands (BVI) on Oct 23, 2019, with management in Singapore and Mr Ong as the sole shareholder. The firm, which operated out of Vietnam, was ordered to be wound up on March 18, 2021.
From 2019 to March 2021, Torque took custody of customer cryptocurrency deposits valued at an aggregate of at least US$205.9 million (S$275.6 million). It claimed that it would use automated and algorithmic trading programs to trade and generate returns for its customers’ deposits. But the liquidators’ investigations found no record of such activities.
The liquidators’ investigations showed that Torque had been using an account registered with Binance.com under a Vietnamese employee’s name and personal e-mail address to hold and trade customers’ deposits, and this account never held more than US$18.7 million worth of customer deposits at any one time.
Torque’s other accounts also never held assets of any significant value.
The liquidators also found a substantial portion of these cryptocurrency deposits were subsequently lost as the total value of customer deposits held by Torque amounted to only US$8.6 million on March 18, 2021 when it was wound up.
Mr Ong, who apparently could not explain or account for the loss of customers’ deposits, has been accused in the current lawsuit of pocketing customers’ deposits by making unauthorised payments of 71.0273 Bitcoins with an estimated value of US$25.3 million to 15 cryptocurrency wallet addresses belonging to himself.
The remaining missing portion of customer deposits, however, remain unaccounted for, despite the investigative efforts of the liquidators since the date of the liquidation.
These missing customer deposits have proven untraceable and unrecoverable, in light of the significant deficiencies in Torque’s financial and trading record-keeping, noted court documents.
Under Mr Ong’s watch, “Torque operated in an utterly shambolic manner” and “did not have even the most basic forms of corporate governance or financial controls in place”, said the liquidators in their statement of claim.
It illegally provided regulated services in Singapore, or to Singapore-based customers, without the requisite licence or exemptions from the Singapore regulators, and without implementing any of the risk management and internal control practices expected of a company of its nature, including those laid out in the Monetary Authority of Singapore’s guidelines, according to the court documents filed.
Notwithstanding that Torque’s trading activities took place in Vietnam, Mr Ong and a group of individuals had apparently begun marketing Torque’s platform and services, onboarding customers and receiving cryptocurrency deposits and conducting trading even before Torque was formally incorporated.
A significant portion of the customers that used Torque’s cryptocurrency trading services were located in Singapore. Between Aug 2, 2019 and Feb 23, 2021, Torque accepted registrations from 2,577 customers located in Singapore to open 41,416 accounts, with cryptocurrency deposit balances amounting to about US$137 million.
It was previously reported that Torque had over 14,000 investors across 120 countries. There were businessmen, working professionals, students, housewives and retirees.
Court documents also noted that Torque’s trading operations and custody of customer deposits were left to be run by “a team of rogue traders and coders in Vietnam” led by two individuals – named Wu Zhongyi and Fong Chee Kiong – without any form of effective supervision or oversight. There was also no independent accounting or auditing department, or record-keeping system.
Mr Fong, who was the former chief product officer, was accused of conspiring with Mr Wu, the former chief technology officer, to misappropriate hundreds of millions worth of cryptocurrency assets from Torque between January 2020 and February 2021. They were declared bankrupt in December 2022, after Torque’s liquidators began bankruptcy proceedings against them.
Mr Ong allegedly breached his duty as the sole director and chief executive of the firm when he failed to prevent unauthorised payments being made by his staff.
The Straits Times reported in 2021 that about 100 police reports were lodged against Torque and Mr Ong. About one-third of the reports were made by foreigners via Singapore police online platform I-Witness.
Police confirmed the reports lodged and said investigations were ongoing.
Investors who spoke to The Straits Times said their investments in cryptocurrency were meant for their retirement, down payments for houses, weddings, medical expenses and children’s education.
JinseFinance
Alex
Bitcoinist