It was not the court's role to make decisions for receivers who are experts in cryptocurrency
The Federal Court refused an application for judicial advice by court-appointed receivers on whether to un-stake digital currency assets amidst ongoing litigation.
The case's background involves an urgent ex parte order sought by the Australian Securities and Investments Commission (ASIC) against the defendants for asset preservation and the appointment of receivers. The court granted these orders, which were later amended and extended, specifically addressing the definition and management of digital currency assets.
NGS Group Ltd, a defendant, and its director applied to discharge the freezing orders, arguing that ASIC had withheld material information. This discharge application is pending judgment.
Meanwhile, the receivers filed an application for judicial advice on handling the digital currency assets, requesting urgent ex parte relief. They sought justification for either un-staking or maintaining the status quo of these assets, citing significant risks in both actions.
The Federal Court upheld the refusal of the judicial advice application initially denied by the lower court. The federal court noted that the receivers had power and justification for either proposed course of action. However, the court emphasized that it was not its role to make commercial decisions on behalf of the receivers, who are experts in cryptocurrency investments and fully understand the implications of their decisions.
The receivers argued that judicial advice was necessary to protect them from potential liability and criticism, especially if the digital currency assets decreased in value upon un-staking. They expressed concerns about the possibility of the defendants dissipating the assets if the freezing orders were lifted.
Despite the receivers' assertions of urgency and potential risks, the court found insufficient evidence to justify the need for judicial advice. The court also highlighted that applications for judicial advice are typically inter partes, where all parties are given the opportunity to be heard, which was not the case here.
Ultimately, the court underscored the limited scope of judicial intervention in commercial decisions by court-appointed receivers, emphasizing the receivers' expertise and responsibility in managing complex assets like digital currencies.