By Christopher Ramsay and Simon Wu

Recent British Columbia cases, Atom Holdings (Re), 2024 BCSC 1397, and its appellate follow-up, Su v. Atom Holdings, 2025 BCCA 199, offer valuable insights into the complex landscape of cross-border insolvencies, especially where cryptocurrency and digital asset recovery are involved. These decisions not only illustrate the legal complexities inherent in such matters but also showcase innovative uses of the Cross-Border Insolvency provisions in the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (the “BIA”).

Background

Atom Holdings, a cryptocurrency holding company incorporated in the Cayman Islands, operated the AAX cryptocurrency exchange platform (“AAX”). Following the highly publicized collapses of major crypto exchanges in 2022, panic spread among AAX users, prompting mass withdrawals that quickly overwhelmed the platform, ultimately leading to its collapse. At the time of shutdown, hundreds of millions of dollars of crypto assets belonging to users remained unaccounted for and inaccessible. In March 2023, the Grand Court of the Cayman Islands appointed joint liquidators to oversee the winding-up of Atom Holdings. Since then, the joint liquidators have initiated court proceedings in multiple jurisdictions aimed at tracing and recovering assets allegedly misappropriated by former executives, including Mr. Weiyi “Victor” Su.

As investigations unfolded, it was discovered that Mr. Su had relocated to British Columbia and possessed substantial crypto assets connected to AAX. This led to an ex parte application made by a team of skilled insolvency litigators comprised of Christopher Ramsay, Nick Carlson, and Cameron Fox, who successfully obtained and defended an order recognizing the Cayman Islands liquidation as a “foreign main proceeding” as defined under section 268 of the BIA and an order under section 272 of the BIA authorizing the seizure and preservation of evidence and AAX assets in Mr. Su’s possession.

The Decisions

In Atom Holdings (Re), 2024 BCSC 1397, Mr. Su sought to set aside the orders made at the ex parte application. He alleged that the applicant breached its duty of full and frank disclosure by not disclosing the entirety of an interview transcript.

The Court found that there was no material non-disclosure as the impugned evidence was merely “icing on the cake”. The Court continues by stating that the orders granted in the ex parte application were granted on the totality of the evidence linking Mr. Su to the misappropriated assets.

In Su v. Atom Holdings, 2025 BCCA 199, Mr. Su appealed the 2024 decision, arguing that the chambers judge erred by finding there was no material non-disclosure. The Court of Appeal dismissed Mr. Su’s appeal. The Court found that the chambers judge correctly applied the legal test for materiality and refused to interfere with the chambers judge’s decision to maintain the orders.

Novel Applications and Takeaways

The Atom Holdings saga demonstrates the complexities inherent in cross-border insolvencies involving digital assets. Atom Holdings’ liquidation was conducted under Cayman Islands law, yet recovery actions spanned multiple jurisdictions, including Hong Kong, the United States, and Canada.

In Canada, these decisions represent novel applications of Cross-Border Insolvency provisions in Part XIII of the BIA. We can see this most clearly in the context of section 272 of the BIA.

Section 272 of the BIA grants the Court wide discretion to “make any order that it considers appropriate” for the protection of the debtor’s property or the interest of creditors once a foreign proceeding has been “recognized”. The subsections of section 272 provide a non-exhaustive list of orders the court can make.

Appealing to this wide discretion, the applicants successfully obtained an order authorizing the seizure and preservation of evidence and AAX assets held by Mr. Su. Notably, this marks the first instance of a Canadian court using section 272 to grant what is, in substance, an Anton Piller order. This development is new law that signals a potentially more flexible and pragmatic approach to the scope of relief available under section 272.

Additionally, an order was also granted to appoint FTI Consulting Canada Inc. as a “search officer” to execute the terms of the de facto Anton Piller order and report back to the Court. This role has certain similarities to the idea of an “information officer” often appointed in cross-border insolvencies under the Companies’ Creditors Arrangement Act,[1] but its use in the BIA context is novel and unprecedented.[2]

The assets at the heart of these proceedings were cryptocurrencies, a digital asset that presents distinct challenges due to its decentralized, anonymous, and rapidly transferable nature. Accordingly, the orders sought under section 272 were carefully crafted to mitigate these risks and facilitate effective asset recovery.

Finally, these decisions also highlight the critical role that specialized blockchain and cybersecurity forensic experts can play. Forensic accounting and digital tracing were instrumental in linking Mr. Su to the misappropriated AAX assets. Courts relied heavily on these expert findings in granting and upholding extraordinary asset and evidence preservation orders.

Conclusion

The Atom Holdings decisions mark a significant development in Canadian cross-border insolvency law, showcasing how courts are prepared to adapt existing legislative frameworks to address the unique challenges of cryptocurrency and digital asset recovery. These cases illustrate that, with innovative legal strategies, robust forensic evidence, and experienced counsel, the complexities of cross-border insolvencies involving digital assets can be effectively managed.

If you have any questions or inquiries, please do not hesitate to contact Christopher Ramsay or a member of our Banking, Insolvency & Restructuring team, who will be happy to assist you.

 

[1] Instant Brands Acquisition Holdings Inc. et al., 2023 ONSC 3645 at para. 20.

[2] Karen Fellowes, KC, Jakub Maslowski, Natasha Doelman and Archer Bell, Part XIII of the Bankruptcy and Insolvency Act—the Less Recognized Recognition Statute, 21st Edition of the Annual Review of Insolvency Law, Thomson Reuters, February 2024. p. 7.