The multi-million-dollar question at the heart of this case was whether cryptocurrency, initially purchased for the sum of $3,050, but worth several million dollars at the time of the liquidation of the company, was an asset of the company. The Court in this case said yes.
THE PARTIES
· Anthony Phillips – Liquidator of Ex NF Pty Ltd (formally Next Faze Pty Ltd).
· Derek Munneke – a software developer, the sole director of NF, the beneficiary of the 106 Ward Trust and formally the trustee of the 28 O’Connell Trust.
· Ex NF Pty Ltd (NF) – a mobile and web development company in liquidation.
· Linda Zaccara – Mr Munneke’s wife. Sole shareholder of NF, and the sole director and shareholder of 28 O’Connell Pty Ltd and 106 Ward Street Pty Ltd.
· 106 Ward Street Pty Ltd – owner of the property located at 106 Ward Street, North Adelaide. Trustee of 106 Ward Trust.
· 28 O’Connell Trust – owner of the property located at 28 O’Connell Street, North Adelaide.
· 28 O’Connell Pty Ltd – trustee of the 28 O’Connell Trust.
THE FACTS
The facts in this case are outlined below as follows:
1. On or about February 2014, Mr Munneke opened an account in his name with CoinJar (a cryptocurrency exchange) which was linked to NF’s NAB account, and used this account to purchase Bitcoin (and then Ethereum);
2. On 19 November 2015, Mr Munneke (as trustee of the 28 O’Connell Trust) entered into a contract to purchase the O’Connell Property for $1.7 million;
3. On 10 December 2015, the settlement of the sale of the O’Connell Property occurred and was funded using money from NF’s bank accounts, and a loan of $740,000 from ANZ.
4. On 4 January 2018, Ms Zaccara entered a contract to purchase the Ward Street Property for $1.2 million.
5. To fund the purchase of the Ward Street Property, Mr Munneke sold 1,100 units of Ethereum realising about $1.4 million, which was held in NF’s bank account.
6. On April 2019, Mr Munneke and Ms Zaccara separated.
7. On 15 May 2019, the Federal Court granted the ATO’s application to wind up of NF, and appointed Mr Phillips as the liquidator of NF.
8. On 3 March 2021, and 18 November 2021, Mr Phillips commenced proceedings against Mr Munneke and Ms Zaccara concerning the cryptocurrency and the Ward Street and the O’Connell Street purchase.
THE RELIEF
9. Mr Phillips and NF, alleged that:
a. the crypto was purchased in 2014 using NF’s funds, and sought, amongst other things, consequential declarations that the crypto was the property of NF;
b. Mr Munneke had breached his statutory and fiduciary duties as a director by purchasing the O’Connell and Ward Street properties using NF funds when the company had woefully inadequate records and was of questionable solvency;
c. the shareholders (Ms Zacarra) could not ratify conduct of a director which is adverse to the interests of creditors. Accordingly, shareholder ratification was legally impossible in circumstances where NF was in a dire financial situation; and
d. both properties were held on constructive trust for NF.
10. In contrast, Mr Munneke argued that:
a. Ms Zaccara and him had purchased the crypto as a family investment;
b. he had used funds from the NF account as they were “convenient” and that he was the owner of the cryptocurrency at law;
c. NF was profitable and had surplus cash available to it and he was entitled to believe that NF was in a healthy financial position;
d. Ms Zaccara, as sole shareholder of Ex NF had agreed, ratified, and acquiesced to the release of NF’s funds; and
e. the shareholder ratification meant that he had complied with his duties as director at all relevant times.
11. As an interesting aside, in response, to a question that has been often asked during a public examination - why didn’t you lodge a tax return? Ms Zacarra responded as follows (emphasis added for the attention of any accountants reading):
"…my psychologist and I had discussed two main things and that is the liquidation process and why I have such difficulty doing tax, paying bills, that sort of thing. He’s related it to some obsessive compulsive disorder but we’re breaking it down…all I can say is that there is an irrational relationship I do have with the tax issue. I know that when I was younger, accountants were [revered]. When the accountant came over to our house, we just sort of had to sort of prepare for royalty."
WHAT THE COURT FOUND
12. The Court held that “the cryptocurrency was and remains the property of the company,” rejecting the contention that it was a personal or “family” investment of Mr Munneke and/or Ms Zaccara, in circumstances were the purchases of the cryptocurrency were on their face a company transaction.
13. That NF facing down the barrel of an outstanding tax liability of around $1.9 million, had insufficient liquid assets to meet the liabilities that were due and payable and to continue trading.
14. It found that the O’Connell Street purchase was “a self‑dealing transaction undertaken at Mr Munneke’s direction and entirely funded by NF to its detriment,” and that Mr Munneke thereby breached his fiduciary duties and statutory duties under section 180–182 of the Corporations Act 2001 (Cth)
15. The Ward Street purchase, funded from proceeds of Ethereum, was also found to be a self‑dealing use of company property and “an unreasonable director‑related transaction” within s 588FDA of the Act and therefore voidable.
16. The Court concluded that shareholder ratification could not cure a director’s breaches where there was a “real and not remote risk of insolvency” and the conduct was “adverse to the interests of creditors” and in breach of statutory duties.
KEY TAKEAWAYS
17. Relevantly, in this case, the Court treated crypto like any other asset purchased using company funds, irrespective of who held the keys. This is important given the exponential growth in the price of crypto (since 2014), and its rise as a valuable (and somewhat mainstream) category of property, which insolvency practitioners can investigate and realise for the benefit of creditors.
18. Likewise, directors and crypto investors should take note that crypto is not a form of property that is protected (or can be hidden) from Liquidators and Trustees (alike) who can investigate, trace and recover crypto, including as in this case compelling delivery of the private keys themselves.
19. Unfortunately for the accounting community at large, the Court rejected Ms Zaccarra’s evidence that she viewed accountants as “royalty” and had an irrational relationship with tax. The lesson from this finding is an old one: lodge your tax returns on time, irrespective of any complicated personal relationship with tax - particularly if you are a director and/or shareholder of a company on the brink of insolvency.
Disclaimer
This article is provided for general information purposes only and does not constitute legal advice. It is not intended to be a comprehensive statement of the law and is limited to a commentary on the facts, issues, and principles arising in Ex NF Pty Ltd (In Liq) v Munneke [2025] SASC 165. The discussion should not be relied upon as applicable to other circumstances.
If you require legal advice in relation to any insolvency, directors' duties, or cryptocurrency ownership, you should obtain independent legal advice. Lauren Brain, Associate, and the Watson Webb team have the expertise and experience to assist with any related enquiries.
You can access the full Supreme Court judgment here.
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