Court Denies Mareva Relief in RM3 million Crypto Dispute
A RM3.2 million crypto dispute has landed in the Malaysian High Court, centering on Tether (USDT) and allegations of misappropriation.
The plaintiff sought a Mareva injunction to freeze assets, but the Court ruled there was not enough evidence of risk of dissipation of assets.
I write on the case of Sim Kwang Kai Adrian v Johnathon Wong Futt Po (see grounds of judgment dated 28 April 2025).
What is Tether / USDT?
Tether (cryptocurrency code: USDT) is a type of stablecoin—a digital asset designed to maintain a stable value by being pegged to another asset, in this case, the US Dollar. Its low volatility makes it a popular choice for payments and transfers.
In Malaysia, cryptocurrencies fall under the regulatory oversight of the Securities Commission Malaysia.
Only approved tokens can be traded on licensed digital asset exchanges. Currently, there are just over 20 recognised tokens—including Bitcoin, Ethereum, and Ripple. Tether is not on this approved list, which raises legal and regulatory risks when used locally for trading or payment.
Brief Facts of the Case
The Plaintiff, Adrian Sim, transferred RM6.95 million worth of USDT to the cryptocurrency wallet of the Defendant, Johnathon Wong. The payment was supposed for investments in various companies affiliated to a Dato’ Simon Cheong.
Sim claimed that Wong had misappropriated approximately RM3.2 million and that sum was not passed on to the intended recipient.
In turn, Wong alleged that the transactions involved money laundering and that the conversion of USDT to ringgit breached the Exchange Control Act 1953.
Sim filed a High Court suit and an application for a Mareva freezing injunction against Wong to freeze assets up to RM3.2 million.
Court Rejects the Mareva Application
Adlin Abdul Majid J ruled that:
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Sim had a “good arguable case”. Sim established the payment of the USDT worth RM6.95 million. There were letters from Dato’ Simon Cheong confirming he had not received this full sum.
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Wong likely held assets in Malaysia. Wong carried on business in Malaysia and would likely have assets and bank accounts. There was also Wong’s cryptocurrency wallet. The service providers operating Wong’s cryptocurrency wallet and other cryptocurrency accounts may be outside Malaysia, but these accounts are under Wong’s control here in Malaysia.
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However, Sim failed to prove a real risk of dissipation of Wong’s assets. The mere allegations of Wong’s misdeeds and lack of probity were not sufficient to prove the risk that Wong would dissipate his assets unless restrained.
Observations
I make three observations of the case.
The country in which cryptocurrency is located
The High Court Judge touched on the issue of Wong, resident in Malaysia, having control of his cryptocurrency accounts. Therefore, this would mean the cryptocurrency assets are within the jurisdiction of Malaysia.
This would be consistent with the obiter remarks in the English High Court decision of Tulip Trading Ltd v Bitcoin Association for BSV & Ors [2022] EWHC 667. Falk J opined that cryptocurrency such as Bitcoin would be treated as located in the jurisdiction where the person or company who owns it is domiciled.
Option of proprietary injunction over the USDT
As an alternative to the Mareva freezing injunction, Sim could have considered seeking a proprietary injunction to protect the allegedly misappropriated RM3.2 million worth of USDT. This would involve targeting the specific USDT tokens transferred to Wong’s cryptocurrency wallet and pursuing a tracing exercise to identify their whereabouts.
A proprietary injunction imposes a lower legal threshold (i.e. merely the American Cyanamid requirements) than a Mareva injunction. Notably, it does not require proof of a risk of asset dissipation. Instead, the claimant need only demonstrate that there is a serious issue to be tried—such as whether the disputed asset qualifies as property capable of being subject to injunction.
In cryptocurrency litigation, courts in several common law jurisdictions have affirmed that cryptocurrency can constitute property. For example, the English High Court decision of D’Aloia v Persons Unknown [2024] EWHC 2342 (Ch).
Unregulated crypto transfers and informal fiat off-ramps
Despite its popularity due to its stability, Tether (USDT) is not recognised or regulated in Malaysia. There’s no legal framework to protect users in disputes involving it.
Further, it appears that this transaction was structured as an informal cryptocurrency-to-cash conversion, also known as a crypto-fiat off-ramp. It appears that Wong acted as the crypto-fiat intermediary.
The case highlights the significant legal and financial risks of using unregulated off-ramp arrangements. Disputes over crypto-to-fiat transfers can quickly escalate into allegations of misappropriation or even money laundering.
