NGS Saga: Concerns about location of crypto investments

A crypto group’s director is trying to have court appointed receivers discharged, as investigations reveal concerns about the whereabouts of super money.

The director of NGS Group Mark Ten Caten is trying have freezing orders made against him and his crypto companies discharged.

It can also be revealed Mr Ten Caten has asked the Federal Court to remove McGrathNicol as receivers of his and his company’s assets, including those of NGS Crypto and NGS Digital.

The Australian Securities and Investments Commission lodged court action against Mr Ten Caten, the crypto companies and two other directors — Ryan Brown and Brett Mendham — seeking orders their assets be frozen amid concerns for about $60m worth of superannuation money invested with them.

ASIC alleged the companies may have breached the law by providing financial services without a licence.

In a further revelation, a judgement linked with the matter reported the receivers are concerned between 64 per cent and 90 per cent of investors’ money has been moved to NGS Indonesia.

The details were released late on Friday in a judgement pertaining to a secret application brought by the receivers seeking judicial advice about whether they should un-stake the digital currency assets or leave them un-staked.

“The Receivers anticipate that their decision to un-stake the digital currency assets is likely to be attacked by the third and fifth defendants as being unreasonable or improper on the basis that the value of the assets will be diminished in value if they are un-staked,” the judgement read.

“By way of correspondence … the third and fifth defendants have indicated their opposition to this course, including by requesting that the Receivers undertake not to remove any staked wallets.

“It is for this reason, the Receivers submitted, that the Court should provide judicial advice to the Receivers and, in doing so, protect its appointees from being attacked and liable for damages.”

NGS Crypto director Mark Ten Caten.

McGrathNicol said they are concerned “the third and fifth defendants may dissipate the assets if they fail in their discharge application”.

But, their application was refused, and Federal Court judge Fiona Meagher backed up an earlier judgment by Justice Berna Collier.

“In my view, on a proper reading of the judicial advice judgment, the primary reason the application was refused was that the court was being asked to make a commercial decision which should properly be made by the receivers,” the judgement read.

“The judicial advice judgment makes it clear that the Receivers may potentially be justified in undertaking either course and that they are experts who ‘understand the ramifications of each of their possible decisions in the complex field of cryptocurrency investments’.

“The application for judicial advice is refused.”

In Justice Collier’s judgement, it was revealed there is “significant difference” between the amount which has been invested according to the receivers compared to the value ascribed by Mr Ten Caten and what they have delivered up to the Receivers: “i.e. more than AUD$50m versus US$5m”.

“The Receivers’ investigations indicated that 64 per cent and 90 per cent of the funds paid by investors have been transferred to NGS Indonesia,” Justice Collier’s judgement noted.