Sharma v Cryptopia Limited
[2025] NZHC 2888
•1 October 2025
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2025-485-695
[2025] NZHC 2888
BETWEEN VIHANG SHARMA
Plaintiff
AND
CRYPTOPIA LIMITED
First Defendant
AND
DAVID IAN RUSCOE MALCOLM RUSSELL MOORE
Second Defendants
Teleconference: 1 October 2025 Counsel:
G D R Shand for Plaintiff
S A Barker for First and Second Defendants
Judgment:
1 October 2025
Reissued:
2 October 2025
JUDGMENT OF ISAC J
[Application for freezing order]
Introduction
[1] This proceeding is another arising from the well-known liquidation of Cryptopia Ltd.
[2] Cryptopia ran a cryptocurrency exchange that was hacked in January 2019. Some $30 million worth of cryptocurrency was irretrievably transferred to an undisclosed external exchange. In May 2019, Cryptopia’s shareholders appointed David Ruscoe and Malcolm Moore as liquidators of the company under s 241(2)(a) of the Companies Act 1993. The liquidation involves complex arrangements regarding approximately 370 functioning cryptocurrencies owned by 960,000 account holders
SHARMA v CRYPTOPIA LTD [2025] NZHC 2888 [1 October 2025]
with positive balances in around 180 countries. On 8 April 2020, this Court determined that each type of cryptocurrency is intangible personal property held by Cryptopia as a trustee for the benefit of all of the account holders of that currency.1 Cryptopia is a beneficiary of some of those trusts for cryptocurrency it held itself.2
[3] In a later proceeding, the liquidators applied for directions from the Court regarding a distribution process that returns cryptocurrency held on trust by Cryptopia to account holders as beneficiaries. On 1 March 2024, Palmer J made several directions as to the distribution of cryptocurrency to account holders and the application of trust administration costs to each of the cryptocurrency trusts.3
[4] There was a final cut-off date for claims by account holders of 30 September 2025, after which the liquidators may proceed on the basis that the only beneficiaries of each cryptocurrency trust are those account holders who have fully completed a claims portal process. After that stage, the liquidators will require further directions as to the treatment of unclaimed assets and various other issues necessary to wind up the liquidation of Cryptopia.4
[5] Against that background, the applicant, Dr Vihang Sharma, applies for a without notice freezing order preventing the liquidators from distributing or otherwise dealing with cryptocurrency equivalent to that claimed. Dr Sharma says that efforts to establish his ownership have been unsuccessful. The liquidators are not inclined to provide him with an undertaking preserving his claimed interest in Cryptopia’s assets, and with the passing of the cut-off date for account verification there is a risk of dissipation.
[6] In support Dr Sharma and his accountant have made affidavits claiming the existence of a pre-hack investment in Cryptopia of 549 Bitcoin covering up to 471 separate accounts. The approximate value of these investments today amounts to NZD $108 million. Dr Sharma deposes to having been frustrated by the liquidators’
1 Ruscoe v Cryptopia (In Liquidation) [2020] NZHC 728, 2020 2 NLZR 809 at [69], [120], [133], [187], and [186].
2 At [146].
3 Ruscoe v Houchens [2024] NZHC 419.
4 In Re an application for appointment of counsel and directions as to service concerning Cryptopia
[2025] NZHC 2627 at [8].
online portal for proof of ownership. He says he was a “legacy customer” and “whale investor” within Cryptopia, who used what are known as API keys to access their accounts and undertake trades. Dr Sharma says that he has supplied information to the liquidators concerning the relevant API keys but they have refused to recognise his ownership of the account holdings. Moreover, he deposes that “I was not required to attach an email address to API Keys when I created those accounts”.
[7] In a letter from the liquidators’ solicitors to Dr Sharma’s counsel dated 30 September 2025, they say, among other things:
(a)Dr Sharma’s claim is brought in breach of a statutory prohibition — in s 248(1)(c) of the Companies Act 1993 — against commencing proceedings against a company in liquidation without first obtaining leave of the Court or the consent of the liquidators.
(b)The liquidators are undertaking the liquidation subject to the supervision of the High Court and in accordance with directions made by Palmer J on 1 March 2024. The application for a freezing order runs contrary to those orders and would require Dr Sharma to apply for leave to appeal them out of time.
(c)Despite numerous opportunities Dr Sharma has failed or declined to provide evidence of ownership of the accounts. It is unclear whether Dr Sharma claims to have operated 212 or 471 separate accounts via APIs with Cryptopia. Regardless, to have established each separate account, Dr Sharma would have been required to establish each account using a unique email address in order to operate them via an API. Dr Sharma has not identified the relevant email addresses, beyond one that is associated with “dead” (or valueless) currencies.
(d)Independent verification by the liquidators indicates that as at early September 2025 there is no individual with an account balance matching those claimed by Dr Sharma.
(e)There is no risk of dissipation at present. The liquidators are yet to bring on an application for directions as to distribution which is set down for a hearing on 25 May 2026. It follows that the hard cut-off for making late claims is not a bar to Dr Sharma’s desire to establish ownership, if he is able to do so.
[8] I convened an urgent teleconference on 1 October 2025 to determine the application for an urgent “interim interim” order. Having done so, I decline the application. This judgment sets out my reasons.
Legal principles
[9]Freezing orders are governed by pt 32 of the High Court Rules 2016. In
Hannay v Mount, the Court of Appeal said:5
[19] Under the Rules, the High Court has the jurisdiction to make freezing orders restraining the removal or disposition of assets. Rule 32.5(4) of the High Court Rules provides that the Court may make a freezing order against a judgment debtor or a prospective judgment debtor if:
… the court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because—
(i)the judgment debtor, prospective judgment debtor, or another person might abscond; or
(ii)the assets of the judgment debtor, prospective judgment debtor, or another person might be—
1.removed from New Zealand or from a place inside or outside New Zealand; or
2.disposed of, dealt with, or diminished in value (whether the assets are in or outside New Zealand).
[20]The threat of disposal of the assets, or diminution of their value, is essential to the application for a freezing order. Freezing orders (also known as Mareva injunctions) are thus a valuable protective measure for those commencing civil proceedings. The essential basis of a freezing order is to prevent the dissipation of assets by an actual or prospective judgment debtor, when such dissipation has the effect or object of denying the claimant or judgment creditor satisfaction of their debt. Wasting assets are therefore not usually satisfactory as the subject of a freezing order, for it would defeat the protective purpose
5 Hannay v Mount [2011] NZCA 530.
of such an order if the property under restraint were not to maintain its value.
(Footnotes omitted)
[10] Later, in Oak Hotels & Resorts NZ Ltd v Body Corporate 358851, the High Court held:6
[18] There is no doubt that Oaks has shown that an asset (the $707,687) is to be disposed of (paid out to unit owners). However, assuming for the purposes of the present issue that there is a good arguable case, the fact that an asset is to be disposed of is in itself not enough to invoke the jurisdiction. The heart of the jurisdiction is a real risk that a judgment or award may go unsatisfied. There must be a danger that the prospective judgment creditor’s ability to recover will be defeated because assets have been disposed of. In Bank of New Zealand v Hawkins it was observed that there had to be a “... real risk that the defendant will dissipate or dispose of assets so as to render himself ‘judgment proof’”. This is now expressly stated at r 32.5(4), which provides that the Court “may” make an order if it is satisfied having regard to all the circumstances that there is a danger that the judgment or prospective judgment will be wholly or partly unsatisfied because of the removal or disposal. As Lawton LJ observed in Third Chandris Shipping Corporation v Unimarina SA, there must be facts from which the commercial court, like a prudent sensible commercial person, could properly infer a danger of default if assets are removed. This test is “not unduly exacting”.
…
[20] The jurisdiction is not designed to provide an applicant with pre- judgment security. The general rule that a respondent can deal with its assets without constraint, which applied to the original Mareva jurisdiction, is still reflected in the new detailed rule, if only indirectly. Even if the disposal will result in insufficient funds to pay a plaintiff, a Court is unlikely to interfere if the disposition is genuine and in the ordinary course of business. That limitation of the common law regime applies under the new rules and is indicated in r 32.6(3), which states that the freezing order must not prohibit the respondent from dealing with the assets for the purpose of paying ordinary living expenses and legal expenses related to the freezing order, but also “… disposing of assets or payments, in the ordinary course of the respondent’s business, including business expenses incurred in good faith”. The prospective judgment debtor must be able to continue to trade or carry on business in the usual way.
[21] In short, the common law restrictions on the ambit of the remedy remain, and it will not be permitted to be used by an applicant to force a respondent who could ultimately pay the judgment debt to hold funds for the benefit of its opponent.
(Footnotes omitted)
6 Oak Hotels & Resorts NZ Ltd v Body Corporate 358851 [2013] NZHC 2695.
[11] Against this background, there are essentially three requirements an applicant must establish to support a freezing order:
(a)A good arguable case on the substantive claim.
(b)Assets to which the order can apply.
(c)A “real risk” that the respondent will dissipate or dispose of those assets.7
Consideration
[12] Given the urgency with which the application is made, I state my reasons briefly. In doing so I endeavour to address the central points raised by Dr Sharma in his evidence and submissions.
[13] First, there is no proper foundation for the application to proceed on a without notice basis. Evidence reveals that Dr Sharma has been concerned for months to take steps to protect his position. He was clearly aware of the 30 September 2025 date for completing the ownership verification process. Despite this, he appears to have taken no meaningful steps to protect his position until days before the relevant cutoff. He provides no explanation for this decision. I do not consider his correspondence to the liquidators seeking undertakings provides an adequate explanation for the delay. Accordingly, the apparent urgency is a matter of Dr Sharma’s making.
[14] Second, the evidence in support of the claim to cryptocurrency worth in excess of $108 million is, at best, tenuous. It does not carry me to the conclusion that there is a good arguable case on the merits. Most of the documentary evidence provided by the applicant is derived from affidavits filed by the liquidators in earlier proceedings. What little material there is to support his claim has been redacted without explanation.8 The liquidators have also advised that if Dr Sharma established the
7 A C Beck & Ors McGechan on Procedure (looseleaf ed, Thompson Reuters) at [HR32.2.03].
8 It is also unclear to me whether the affidavit supplied by the applicant conforms with the requirements of the High Court Rules 2016 for the making of an affidavit overseas. The electronic version has been provided to the Court in a form suggesting it is either incomplete or the pages
relevant Cryptopia accounts he should be in a position to disclose the email addresses he used to do so. Dr Sharma claims he did not need an email address to establish the accounts but he has not provided any independent evidence to support that claim. In addition the liquidators point to:
(a)the differing numbers of accounts Dr Sharma appears to claim he operated by API (212 or 471);
(b)Only one email address that can be identified as the applicant’s, which is associated with two dead currencies;
(c)Dr Sharma’s claimed interests in Litecoin cannot be reconciled with the company’s records of that currency; and
(d)Based on Dr Sharma’s first API account records, the liquidators have been unable to identify any individual with the relevant account balances.
[15] Third, in a recent decision I determined an application for access to Court documents in the Cryptopia proceedings made by a person identifying themselves as Dr Vihang Sharma. I recorded that a series of emails sent by the applicant to an officer of the Court led me to conclude:9
[11] In summary, in addition to a conventional request for access to Court documents the applicant has:
(a)offered to arrange an unlawful payment of bitcoin to a member of the Court Registry in return for information;
(b)provided a different email address for what appears to be a “private” response from the Registrar;
(c)falsely claimed I have conducted a “secret teleconference”; and
(d)suggests the applicant and others are sharing Court documents in a private discord group.
have been rearranged. Two schedules appended to the statement of claim which appear to be central to the orders sought do not appear as exhibits in either of the affidavits.
9 In Re an application for access to Court documents concerning Cryptopia [2025] NZHC 2113 at [11].
[16] Dr Sharma has not addressed the connection, if any, he has with the person who sought to solicit information from an officer of the Court. His affidavit in support of the current application, however, appears to suggest he may be responsible for the emails:
I again admit that the tone of my interactions may have been inappropriate due to fear and frustration or my attempt at using humour to diffuse the tense situation may have been misinterpreted. But my motivation was only to gather data so I might recover my assets.
[17] The grant of an interim injunction engages the Court’s equitable jurisdiction. Conduct of an applicant may be sufficiently concerning as to be disqualifying. Given the apparent connection between the applicant in this case and the steps taken by the applicant in the access to Court documents proceeding, I am not satisfied it is appropriate to grant the interim relief sought at this juncture. The significance of this issue would require further examination and evidence.
[18] Fourth, Dr Sharma is not resident in New Zealand. He has provided an undertaking as to damages but provided no information about his ability to make good on the undertaking. Nor has he disclosed whether he has any assets within New Zealand. Given he is seeking to restrain dealings with assets worth in excess of NZD $100 million potentially affecting a very large number of account holders, I would not be prepared to grant a freezing order, even on an interim basis, without the provision of a very substantial security. None has been offered. I agree with Mr Barker’s submission that previous decisions of the Court suggest a conservative security is likely to be in the order of NZD $200,000.
[19] Fifth, I am not satisfied there is any evidence of an imminent risk of dissipation. While the cut-off for proof of ownership of a cryptocurrency account has now passed, there is no evidence to suggest the liquidators propose to act in a way that will prejudice the position of the legitimate owners of cryptocurrency held by the company. Indeed, they are in the process of seeking further directions from the Court concerning the liquidation procedure and the distribution of assets.10 In that context, Dr Sharma
10 Mr Shand advised the Court he was unaware a hearing had been set-down next year for this purpose.
continues to have an opportunity to establish either to the liquidators’ satisfaction, or the Court’s, his claimed ownership of cryptocurrency.
[20] Finally, the balance of convenience does not favour the grant of interim relief. There is no suggestion that without the order Dr Sharma’s claim will be rendered nugatory, or that a judgment in damages could not be met out of the remaining assets of the company.
Result
[21] For the foregoing reasons, the without notice application for an “interim interim” freezing order is dismissed.
[22] The application is adjourned for call in the Judge’s Chambers List on 6 October 2025 for review. A half-day fixture on 16 October 2025 is available if Dr Sharma wishes to pursue his application on notice. If that is the case counsel are encouraged to file a memorandum seeking timetabling directions by consent. To secure the fixture, Mr Shand will need to confirm with the registry that it is required no later than 5.00 pm on 2 October 2025.
[23]Costs are reserved.
Isac J
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