“At this stage, there doesn’t seem to be anything of real value other than the trademark, [but] at this stage, I’m not sure if it has any realisable value,” Nellies told the Herald earlier this week.
Related-party transactions investigated
The liquidator is still grappling with big-picture questions about the firm, which ceased trading at an unknown date “circa March 2021″.
“Issues the liquidator is currently investigating include the trading of the company during the life of the company and various matters that have arisen during the course of the period leading up to the liquidation, including who was actually in control of the company,” the six-monthly report says.
“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,” Nellies said in his first report.
This week, he told the Herald, “Related-party transactions are still being investigated.”
The liquidator was also investigating, “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.”
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. He is still investigating their ultimate ownership. Bitcache was not represented at the liquidation hearing.
A ‘hiccup’
“The company traded as a software developer of a cryptocurrency scheme and was set up in 2016 by Kim Dotcom, who acted as a director for some seven months. Subsequently, two professional directors were appointed, although the liquidator is advised Mr. Dotcom still held an active interest in the running of the business,” Nellies said in his first report.
Dotcom said Bitcache would be worth “billions”, as it staged a $5m crowdfunding drive in 2016 via a Caymen Islands-based platform.
But unlike two other local crypto ventures placed in liquidation, Cryptopia and Dasset, it never got off the launchpad.
On January 21, 2017, just 90 minutes before the service was due to go live, Dotcom tweeted, “Sorry but there has been an unexpected hiccup. Will tell you all about it later today. Let this play out and give me some time to update you.”
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 October 2016, Dotcom - through Twitter - promoted an effort that raised close to $5m through a Cayman Islands-registered crowdfunding site called BNK to the Future. The funds were earmarked for a project Dotcom billed as Megaupload 2.0/Bitcache. (Megaupload 2.0 also failed to launch. A music service founded by Dotcom around the same time called Baboom disappeared just months after its “soft launch”, which centred on Dotcom’s own album, Good Times. Dotcom said Megaupload 2.0 would compete with Mega, a file-hosting service run by his Megaupload cofounders, with whom he had fallen out. Mega continues to operate.)
Dotcom said Bitcache would come to dominate cryptocurrency by offering “custom technology built on top of Bitcoin” that would allow for “Bitcoin microtransactions” to pay for internet content or services.”
Another ‘hiccup’
In December 2022, Dotcom was asked on Twitter (now X): “Remember that company you crowdfunded? Are you ever planning on delivering something for the investors?”
He replied, “Yes. Bitcache NZ never got the software right. Didn’t meet my standards. Restarted everything from scratch. New team. Now called FileShop. Great code.”
In July 2023, Dotcom posted, “Very happy to announce that friendly previous investors and partners have not been forgotten and that this app [FileShop] is coming”, but there was “one hiccup that we still have to overcome”. Dotcom, who could not be reached for comment, has not posted about the Bitcache successor since.
Extradition fight continues
Dotcom has been fighting extradition to the US since his January 2012 arrest on criminal copyright infringement, money laundering, racketeering and wire fraud charges tied to the file-sharing site Megaupload.
On June 15 last year, 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 2022.
Auckland-based Anderson Creagh Lai became Dotcom’s law firm in 2014 after Simpson Grierson dropped the Megaupload founder.
Months later, it emerged Dotcom owed Simpson Grierson $2m. In April 2021, Anderson Creagh Lai applied to remove itself as Dotcom’s solicitor.
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.
