U-Zyn Chua, co-founder and chief technology officer of Cake Group, has applied to the Singapore High Court to wind up the company.
Chua confirmed the application for liquidation and is listed as the claimant, while Cake Group is the defendant, indicating a compulsory winding-up proceeding initiated by Chua. The pending lawsuit notice was published in The Straits Times classifieds.
In Singapore, winding up involves the collection and sale of a company’s assets to pay off debts, with remaining funds distributed among shareholders, leading to the company’s cessation. Cake Group, the parent company of crypto platform Bake, recently announced a 30% staff cut on November 14.
The group, relying on transaction fees, experienced a significant revenue decline of over half to US$266 million in 2022, with profits plummeting over 5x to US$23.5 million during the same period.
Reasons for the winding-up application are unclear, and Chua declined to provide further details.
CEO Julian Hosp, unaware of the filing until December 6, is engaging lawyers to address the situation. He mentioned the company’s strong case for dismissing the winding-up application and the regrettable exposure of internal disagreements to the public.
The court filing cites Section 125(1)(i) of the Insolvency, Restructuring, and Dissolution Act of 2018, which allows winding up if “the Court is of the opinion that it is just and equitable.” Hosp emphasised that the application is not due to Cake Group’s inability to pay debts, and day-to-day operations remain unaffected.
Chua previously highlighted a growing rift with Hosp, stemming from cuts in the engineering section, and expressed surprise at the situation’s escalation. Insiders noted tense relations between co-founders in recent months.
The co-founder dispute relates to internal disagreements during the company’s restructuring in mid-November, coinciding with a significant staff reduction of 53 people or 30%. The court has scheduled a hearing for creditors or opposers on December 22.
In response to the winding-up application, Hosp stressed Cake Group’s solvency, financial strength, ongoing business activities, and the ability to meet obligations. He underscored that assets exceed liabilities, and customer funds remain backed on a one-to-one basis.
The filing comes amidst the broader crypto market downturn, with Cake Group’s revenue dropping from $631 million in 2021 to $266 million in 2022, and profits declining from $134 million to $23.5 million during the same period.