The liquidation of iCE3X, one of South Africa’s oldest crypto-currency exchanges, has been delayed for a further year, as liquidators continue efforts to recover more than R30 million in allegedly missing crypto-assets and prepare fresh legal action in the UK.
Court documents filed by joint liquidators Marthinus Breytenbach and Gottlieb Moabelo, seen by ITWeb, show they have applied to the Master of the High Court for an extension until 31 May 2027 to lodge the company’s liquidation and distribution account.
The latest affidavit argues that the account cannot yet be finalised because multiple legal proceedings remain unresolved, including litigation over the ownership of crypto-currency assets, ongoing asset recovery efforts and planned proceedings in the UK aimed at tracing missing digital assets.
Founded in 2013, iCE3X dealt with digital currencies such as Bitcoin, Litecoin, Ethereum, Dogecoin and Dash, among others.
The company entered voluntary liquidation in April 2021 after suspending trading and withdrawals, becoming one of South Africa’s highest-profile crypto-currency exchange collapses.
At the time, then-iCE3X CEO Gareth Grobler informed customers that the company had identified discrepancies in the Bitcoin and Litecoin balances it held on the platform.
He said that after consultations with the exchange’s technology partner, Merkeleon.com, and its subsidiary, Coinspaid.com, the parties had been unable to reach a satisfactory conclusion.
On the advice of the company’s legal and auditing teams, iCE3X subsequently suspended all deposits and trading.
As previously reported by ITWeb, the liquidators have since been attempting to trace missing assets, examine the company’s affairs and recover funds for creditors.
No finalisation yet
According to the affidavit, the liquidators say the reasons underpinning previous requests for extensions “remain extant and unchanged”.
At the centre of the latest delay is litigation brought by one customer, John Mackenzie Johnson, who is seeking a court declaration that certain crypto-currency assets fall outside the insolvent estate.
The liquidators argue the outcome of the case will directly determine the composition of the estate, the treatment of crypto-currency holdings and ultimately how creditors are paid.
“The matter has not yet been finalised, and we are presently awaiting confirmation of a trial date,” the affidavit states.
The liquidators say they attempted to expedite the dispute by proposing private arbitration, but the proposal was declined by Johnson.
“It remains our considered position that it is not reasonably possible to finalise the liquidation and distribution account pending determination of this litigation,” they state.
The affidavit also reveals that the liquidators have consulted extensively with UK legal representatives and intend launching fresh proceedings there within the next two months.
Those proceedings will seek additional evidence relating to crypto-currency accounts allegedly held or managed by the company’s former sole director and shareholder, Grobler, who resides in London.
According to the affidavit, the objective is to trace and recover assets belonging to the insolvent estate and determine the cause of the crypto-currency shortfall.
The liquidators believe the outcome of the UK proceedings will materially affect the ongoing Section 417 and 418 insolvency inquiry, asset recovery efforts and the eventual liquidation.
“The proceedings are directed at addressing the issue of the so-called ‘missing’ crypto-currencies and/or establishing the reasons for the shortfall identified in the estate of the company,” the affidavit states.
The latest filing builds on investigations that have been under way since the liquidators were provisionally appointed in June 2021.
After consulting with Grobler, the liquidators received substantial crypto-currency holdings and R9.55 million in cash during November 2021.
The assets transferred included Bitcoin, Ethereum, Cardano, Litecoin, XRP, Dogecoin, Binance Coin, Monero and several other digital currencies.
However, the affidavit shows that a forensic investigation involving thousands of company documents, bank records and historical crypto-currency trading records obtained from an international third-party platform later concluded that not all company crypto-assets had been handed over.
The liquidators state that repeated attempts to obtain the remaining assets voluntarily were unsuccessful.
This prompted urgent legal proceedings in the High Court of Justice in London during 2022, resulting in a provisional order against Grobler. Following that order, additional Ethereum was transferred to the estate in June 2022.
Despite those recoveries, the liquidators now say experts assisting the investigation have identified further outstanding Bitcoin, Ethereum and Litecoin, with an estimated value exceeding R30 million.
They refrain from disclosing precise amounts because of what they describe as the “extremely sensitive nature” of the ongoing investigation and anticipated litigation.
Progress on insolvency inquiry
The affidavit also highlights progress made through the Section 417 and 418 insolvency inquiry.
According to the liquidators, 64 individuals have been examined during the inquiry process, which has resulted in recoveries of approximately R4.16 million from debtors of the company and enabled further legal proceedings against additional debtors.
Those investigations remain ongoing.
Another unresolved issue concerns ownership of crypto-currency balances reflected in customer accounts before iCE3X entered liquidation.
Johnson’s High Court action seeks clarity on whether crypto-currency shown in users’ platform accounts should be regarded as company assets forming part of the insolvent estate, or remain the property of customers under the exchange’s contractual terms.
The liquidators argue the outcome will have significant implications for all creditors, including former platform users, because it will determine how crypto-currency currently under their control should be treated.
“It would be premature, and potentially prejudicial to creditors, to prepare and lodge an account absent clarity on ownership of crypto-currency assets, recoverability of such assets and finalisation of pending claims,” the affidavit says.
Status of the estate
The estate currently holds R1.125 million in its investment account and R1 962.80 in its trust account, according to the latest filing.
The request marks another delay in winding up iCE3X, reflecting the complexity of liquidating crypto-currency businesses where digital assets span multiple jurisdictions, and ownership remains legally contested.
For former customers and creditors, it means the wait for a final distribution will continue while the courts determine ownership issues and liquidators pursue additional asset recovery in both South Africa and the UK.
Says one client in a Telegram group created by former customers: “We are five years down the road; when are things going to be settled with this ordeal? Why have we not gotten a cost schedule of what things have cost and how much has been recovered and where things are sitting, plus a time frame yet?”
Says another: I’m waiting for my crypto just like Cryptopia was resolved – take your cut and give me back what’s mine.”
ITWeb’s efforts to reach out to Grobler were unsuccessful.
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