But even with those funds secured, it was not clear how much would go to customers. The liquidators have “Engaged legal counsel to review the terms and conditions of the exchange to consider the relationship and therefore priority of users in terms of class of creditor. This is important as it will dictate whether the cryptocurrency recovered is held in trust for users or whether it should be in the same pool for all company creditors as unsecured creditors”.
Staff were owed $16,700 in unpaid wages, IRD $203,700 and various unsecured creditors $53,700.
They were also making progress toward accessing funds held - and frozen - by an un-named, offshore third-party exchange, but “Overall progress has been hindered by the fact that we have had no contact with the CEO since the 3rd day of the Liquidation, despite our numerous attempts to contact him. While the third-party offshore exchange has been forthcoming with information, the CEO is understood to retain the key knowledge of how the overall exchange worked and also how/if customer records are stored.”
Former director, investor and advisor to the Reserve Bank on cryptocurrency Fran Strajnar moved to El Salvador in May. Strajnar told the Herald he moved to El Salvador because it had adopted bitcoin as its official currency. He and other board members were shocked at Macaskill’s alleged actions. Strajnar was co-operating fully with the liquidators and authorities.
Moore would not comment on the amount of funds in the third-party exchange.
The liquidators were still in the process of trying to verify customers’ balances.
“From the Liquidator’s investigations and interviews held with ex-employees, it appears there were significant problems with how the company maintained accurate user records including user balances.”
The liquidators say Dasset had around 5000 users. Several have told the Herald they lost access to accounts holding tens of thousands.
One user said he was out of pocket to the tune of $5m. He sent the Herald documents indicating the sum involved a mix of “on-exchange” trades and “over-the-counter” (OTC) trades made directly by Macaskill on the customer’s behalf, outside of Macaskill’s role with Dasset (the CEO has not responded to various phone calls and texts from the Herald, bar a message on the day before his firm’s liquidation, where he blamed problems on the withdrawal of Dasset’s banking services provider).
The Serious Fraud Office and the Financial Markets Authority both launched inquiries after liquidators were appointed. Several customers have told the Herald they have been sent questionnaires but neither agency will comment while investigations are under way.
Although Dasset promoted that it was on the Financial Service Providers Register, and subject to the register’s disputes provider, the Insurance & Financial Services Ombudsman Scheme, the scheme did not have the teeth to pursue customers’ complaints from May onwards about being unable to access accounts or reach Dasset staff. Cryptocurrency is an unregulated financial product in New Zealand.
A Finance and Expenditure Committee report on cryptocurrency was published shortly after Dasset’s liquidation. Then Commerce Minister Duncan Webb leaned toward industry self-regulation, and his opposite number was on the same page.
The report recommended the local crypto exchange industry “develop a best practice code or guidance with minimum standards for the custody of digital assets”.
Andrew Bayly - then National’s commerce spokesman and now the minister in charge of the portfolio - told the Herald: “Clearly there needs to be more oversight and regulatory clarity. But neither do we want Kiwis to miss out on the opportunities that cryptocurrency and associated technologies like blockchain can provide.”
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.
