Consideration
35 It must be borne in mind that the anti-suit injunction proceeded on an ex parte basis. On this application both Mr Karis and Digital CC have been represented. At this stage of the proceeding, where the case has been presented on affidavit and the pleadings have not progressed beyond a statement of claim, it is not possible to predict with certainty what will be the outcome of the case. However, I am satisfied on what I have seen to date that the parties both have respectable arguments underlying their claims to the bitcoin in question. Neither claim at present can be described as vexatious or frivolous.
36 Whilst I was prepared to grant the ex parte anti-suit injunction on the basis of the undertaking provided by Mr Karis through senior counsel at that time (and noting that the court may receive the undertaking of an overseas applicant - Caravelle Investments Ltd v Martaban Ltd (1999) 95 FCR 85 at [24]-[25]), Digital CC has now had the opportunity to be heard relevantly as to whether the undertaking can be supported and the risks with respect to access to the bitcoin.
37 Digital CC points to the difficulty that none of Mr Karis, the bitcoin or the rehabilitation trustee are within the jurisdiction of the Court and that at present, it has nothing but Mr Karis's word that the bitcoin or proceeds that he receives will be placed by him into his solicitors' trust account or otherwise placed in the hands of a trustee.
38 This is in a scenario where Mr Karis has indicated some good intent with respect to directing the bitcoin or its proceeds into trust: so much is apparent from his execution of the letter of 24 June 2022, and also from the statement in his solicitors' email of 24 June 2022 to the effect that he is not unwilling to secure the bitcoin. I add that senior counsel for Mr Karis rightly acknowledged before me in effect that the undertaking that he gave to the Court on behalf of his client on 13 June 2022 was given with the understanding that it was necessary and had a purpose.
39 For the reasons that follow I will make orders largely in accordance with Digital CC's proposal, but in doing so I note that the evidence does not establish that Mr Karis in fact intends to breach his undertaking to the Court. However, as a matter of fairness and common sense, having regard to all of the matters before me, I consider it appropriate that there be relief that preserves the bitcoin or its distribution proceeds until this proceeding is resolved by judgment or further order, unless by consent. The bitcoin is one of the subjects of and is central to the dispute, the rights to it are contested and it is apparently of potentially significant value. In those circumstances I consider that I have power under s 23 of the Federal Court of Australia Act 1976 (Cth) to grant the relief sought, and that it is appropriate to do so.
40 First, Mr Karis had already indicated by his undertaking that he would pay any funds received from the rehabilitation trustee into trust. The orders proposed by-pass receipt by Mr Karis personally, in that they have the result that the bitcoin or any payment are distributed by the rehabilitation trustee directly into trust or into the hands of a trustee, but the net effect of that course is the same as if there were compliance with his undertaking: Mr Karis will not be in a position to control the further distribution of the bitcoin or its proceeds, but his interests in them will be protected. As that end result is consistent with that anticipated by his undertaking, it is difficult to see that there is any real prejudice to Mr Karis. Mr Karis had also suggested (by the time of the second hearing) that the bitcoin be held by his solicitors on trust.
41 Second, and as noted, the bitcoin is central to the litigation and if it is lost, or its proceeds are lost, then any judgment in favour of the respondents may be defeated.
42 Third, the proposal does not purport to secure the bitcoin in favour of the respondents. It preserves the asset so that it remains available to be delivered appropriately after judgment, and does not purport to do more than is necessary in that regard.
43 Fourth, I have given careful thought to the identity of the proposed trustee and the contest inherent in the proposal that Mr Del Monaco might hold the bitcoin on trust in lieu of Boutique Capital. I make no criticism of Mr Del Monaco. However, it seems to me that the sensible course is for an AFSL licensee with experience in dealing with cryptocurrency to assume that role. Cryptocurrency is not simply money, as senior counsel for Mr Karis acknowledged. Whilst its use as currency is becoming widespread, there was no evidence before me that suggested Mr Del Monaco or his firm had any particular expertise in dealing with cryptocurrency units, exchange platforms, wallets, keys or the like. It might be said that if the bitcoin are simply held on trust, any such expertise is not particularly relevant. However, it may be that particular issues arise which may be dealt with in the interests of all parties more efficiently by a specialised trustee. I also have concerns as to the generality of Mr Del Monaco's evidence about his willingness and capacity to act as trustee, dealt with in three lines in his affidavit. I acknowledge his undertaking to keep the Court informed of relevant developments, but the fact that the Court is updated may not necessarily assist with the issues at hand. I would expect in any event that Mr Del Monaco would keep the solicitors for Mr Karis and the Court informed of relevant developments.
44 I prefer the Digital CC proposal that Boutique Capital assume the role of trustee. I am satisfied on the basis of the information that has been included above, and having regard to the regulatory processes in place under the Corporations Act, that Boutique Capital is well placed to communicate with the rehabilitation trustee about any intricacies of the proposed distribution of the bitcoin, respond to any question of the rehabilitation trustee, and address any issues that might arise in the course of facilitating a distribution to Boutique Capital.
45 Fifth, I am not persuaded that it is appropriate to delay further the making of orders in this matter. It is unclear when the rehabilitation trustee might proceed to make any distribution. I accept that step may not be imminent - but then again, it may be. The absence of a timely response from the rehabilitation trustee to the Monaco Lawyers' letter of 12 July 2022 causes some concern. This is not a criticism of the rehabilitation trustee, as it is by no means clear that the urgency of the request for information was impressed upon them. However, Mr Karis has not been able to point to any evidence that indicates that his particular circumstances or claim have been given attention by the rehabilitation trustee to date, nor when that might occur. Against that, there is some evidence of potential detriment if steps are not taken quickly with respect to any direction or assignment of Mr Karis's claims in the rehabilitation, and there is evidence that distributions will occur from the end of August 2022. If the orders as sought are not made, then it might be that Digital CC would have little option in order to protect access to the bitcoin but to attempt to pursue further court action in the US or in Japan. Whether that could be achieved prior to the end of August is unknown and logically the prospect of that being so reduces as time goes by. Therefore, I am not satisfied that it is appropriate to adjourn the matter further until 3 August 2022, particularly where it is not known whether any suitable alternative plan will be forthcoming at that time.
46 Sixth and related to the fifth point, Mr Karis has not rushed to deal with the rehabilitation trustee since the 13 June 2022 orders. The evidence indicates an absence of engagement or urgency, whether by Mr Karis or his solicitors, with ascertaining steps that might be undertaken to understand and address the pending distributions by the rehabilitation trustee. I am not convinced that anything will be achieved in the short term, based on the conduct to date.
47 Seventh, I do not accept that Mr Karis has not had an opportunity to investigate Boutique Capital. It was identified and suggested as early as 14 June 2022. No legitimate concern as to its potential involvement has been raised.
48 Eighth, the appointment of Boutique Capital need not be final. If in the fullness of time the parties agree that another trustee might be appointed, presumably that could be achieved. Further, if Mr Karis has a legitimate concern as to the conduct on the part of Boutique Capital, he may utilise the liberty to apply that I will expressly grant, and that I will extend to Boutique Capital as an interested party. There are also steps available to Mr Karis under the Corporations Act.