Background
Zhuang Yujie and Huang Feiling co-founded two Singapore companies — Openmeta Pte Ltd and Aster Foundation Ltd — in late 2021 to sell Web3 domain names under the brand “Star Protocol” on the website star.co. Each founder held a 50% stake in Openmeta and, through a BVI holding company (Web3 Investments Ltd), was the indirect sole member of Aster. Critically, Huang held sole custody and control over all of the Companies’ cryptocurrency assets, which were received in ETH and USDT through sales to retail customers and a 2021 fundraising round that raised 950,000 USDT via Simple Agreements for Future Tokens (SAFTs).
The relationship between the founders broke down after a series of disputed transactions. Approximately 591,050 USDT from the 2021 fundraising was transferred by Huang to Wangsan (Nanjing) Blockchain Technology Co Ltd, a Chinese company in which Huang held 99% of the shares, purportedly for outsourced technical services under an agreement that Zhuang denied ever authorising. In April 2023, 150 ETH held in Huang’s personal wallet disappeared; Huang attributed this to a “security breach,” but no supporting evidence was produced and the blockchain security firm SlowMist could not confirm that explanation. Between October 2023 and February 2024, Huang sold approximately 941.63 ETH without board authorisation, a further ~515.96 ETH remained unaccounted for, and recorded calls captured Huang admitting to commingling the Companies’ assets with his own and conducting unauthorised cryptocurrency trading. On 20 April 2024, Huang unilaterally revoked Zhuang’s access to a jointly managed wallet and to key company email addresses.
Zhuang applied under s 216A of the Companies Act 1967 (2020 Rev Ed) for leave to bring a derivative action in the name of Openmeta and Aster against Huang for breaches of fiduciary duties, and for full conduct of those proceedings. Huang opposed the application, contending that the relevant assets belonged to Web3 Investments (not the Companies), that his management of funds was mutually understood from the outset, that cryptocurrency-to-USDT conversions were routine and legitimate, and that Zhuang had an undisclosed criminal history in China that justified excluding him from shared control of assets.
The Court’s Holding
Sushil Nair JCA allowed the application on 4 March 2026, granting Zhuang leave to commence derivative proceedings against Huang on behalf of both Companies and awarding costs against Huang. The judge applied the well-settled principle that the evidential threshold at the s 216A leave stage is deliberately low: the court’s task is not to conduct a mini-trial of the underlying claim but only to filter out claims that are “most obviously unmeritorious” (Ang Thiam Swee v Low Hian Chor [2013] 2 SLR 340 at [55]). Disputes of fact are left for the eventual trial (Pang Yong Hock v PKS Contracts Services Pte Ltd [2004] 3 SLR(R) 1 at [16]–[19]).
On the facts as disclosed in the affidavits, the court was satisfied that the proposed action met the threshold. Zhuang had standing as a 50% shareholder and complainant. Those in control of the Companies — effectively Huang, who as CEO wielded sole custody of all cryptocurrency assets — were the very persons alleged to have caused harm to the Companies, making it impossible for the Companies to take action in their own right. The uncontested commingling of company and personal assets, the admitted unauthorised sale of company ETH, the transfer of over 591,000 USDT to Huang’s own Chinese company without board resolution, the unexplained disappearance of 150 ETH, and the unilateral revocation of Zhuang’s wallet and email access collectively disclosed a prima facie case of fiduciary breach that was far from obviously unmeritorious.
Key Takeaways
- A 50% shareholder whose co-founder-CEO has sole control of company assets and is alleged to have misappropriated those assets has standing under s 216A of the Companies Act to seek derivative action leave; the deadlock at board level satisfies the policy rationale for the provision.
- At the s 216A leave stage, courts apply a low evidential threshold and will not descend into a mini-trial: affidavit evidence showing a prima facie arguable case of fiduciary breach is sufficient, even where the respondent offers plausible explanations that raise contested factual issues.
- A director’s claim that funds raised by a Singapore company actually belonged to an offshore holding entity, or that asset management practices were “mutually accepted,” does not automatically defeat a s 216A application — these are merits arguments for trial, not filters at the leave stage.
- Recorded admissions by a director of commingling company and personal cryptocurrency assets and of conducting unauthorised asset disposals are powerful prima facie evidence of fiduciary breach sufficient to cross the s 216A threshold.
Why It Matters
This decision applies established Singapore derivative action doctrine to the novel context of a Web3 startup in which company revenues were held entirely in cryptocurrency wallets controlled by one founder. It confirms that the s 216A leave mechanism is available and workable even where corporate assets are purely digital and governance records are informal, and that courts will not allow a controlling insider to use superior technical or operational control over crypto assets as a shield against accountability at the leave stage.
For practitioners advising Web3 and crypto-native ventures, the case is a cautionary reminder that Singapore courts will scrutinise fund flows, wallet custody arrangements, and the absence of board authorisation for cryptocurrency disposals with the same rigour applied to conventional company assets. Co-founders and investors structuring such businesses should ensure clear governance protocols — including multi-signature wallet arrangements and documented board authorisations — for any significant movement of digital assets.