Author: Lawyer Zhang Jingxinyue, PRC-qualified Lawyer | Singapore Registered Foreign Lawyer
Editor’s Note: Over the past two years, a number of Chinese technology, financial and blockchain companies have actively laid out stablecoin-related businesses or offshore digital payment systems. At the same time, the regulatory policies, legal nature and dispute resolution mechanisms for stablecoins have become sensitive issues that companies must confront directly before expanding overseas.
On July 21, 2025, the Appellate Division of the Singapore High Court issued a ruling that attracted strong attention in Asia-Pacific compliance circles: because a BVI company violated the dispute resolution clause in a stablecoin asset management agreement, the lawsuit it had commenced in Hong Kong was halted by the Singapore court.
On the surface, this case appears to be a stablecoin custody dispute. In substance, it is a typical example of “cross-jurisdictional contract governance + performance of procedural obligations.” It reveals three legal blind spots that cross-border stablecoin operators are most likely to overlook, yet which carry extremely high risk.
Case Background Review
Techteryx: incorporated in the British Virgin Islands (BVI), acquired the TrueCoin stablecoin business in 2020 and subsequently appointed FDT as custodian to manage U.S. dollar-linked assets.
Finaport: a Singapore company, appointed by FDT as investment manager to manage the custodial funds.
The investment management agreement between FDT and Finaport provided that disputes had to be negotiated first, then mediated, and only then litigated, subject to the jurisdiction of the Singapore courts.
Techteryx believed that the custodial assets had been diverted to unauthorized investments and therefore directly sued FDT and Finaport in the Hong Kong courts. Finaport applied to the Singapore court, which held that Techteryx had skipped the pre-action steps and thereby committed a procedural breach, and issued an anti-suit injunction.
Stablecoin Business: Three Major Legal Risks Exposed
- Stablecoin Contract Structures Are Complex, Making It Easy to Overlook the Mandatory Effect of “Procedural Clauses”
The stablecoin chain usually involves multiple roles: issuer, custodian, investment adviser, compliance auditor, exchange, and others, with contracts spanning multiple jurisdictions. Different contracts may be governed by different laws and dispute resolution mechanisms. If they are not uniformly designed, it is very easy for a chaotic situation to arise in which “proceedings are commenced in Hong Kong and an anti-suit injunction is obtained in Singapore.”
This case shows that even if you are a “non-contractual party,” as long as you assert contractual rights, you must perform the relevant procedural obligations. When Techteryx sued Finaport on behalf of FDT, it actually had to complete the “negotiation–mediation” process first.
Implications for Chinese companies: When designing multiple agreements for stablecoin custody, investment, audit, etc., the parties should clearly specify:
- all disputes should be subject to a unified jurisdiction and mechanism;
- whether a third party asserting rights assumes the dispute resolution obligations;
- whether the parties agree to mediation as a precondition, and a time limit for failed mediation.
- Breach of Procedural Clauses Under Foreign Law Has More Serious Consequences—Not Only Losing the Case, but Also Potentially Being Enjoined from Suing
Techteryx’s original intention was to protect its rights according to law, but because it failed to perform the procedural steps, the Singapore court ordered an anti-suit injunction. Not only was the original case stayed, but its credibility and ability to assert claims in other jurisdictions in the future may also be affected.
Common law jurisdictions (such as Singapore, the United Kingdom, and Hong Kong) attach great importance to procedural justice. Procedural clauses are not optional “expressions of intent”; they are part of the contractual obligations, and breaching them constitutes a breach of contract.
Tips for Chinese companies: Once a stablecoin business enters the markets of common law jurisdictions, its procedural clauses will be strictly enforced, especially arrangements involving mediation, exclusive jurisdiction, and arbitration priority. Compliance strategies must “get down to the details.”
- The Legal Nature of Stablecoin Asset Management Is Ambiguous: Trust, Investment and Contractual Overlap Easily Trigger Multi-Party Litigation
The disputes in this case involved:
- whether the custodian made unauthorized investments;
- whether the investment adviser performed its duties;
- whether the flow of funds was transparent;
- whether stablecoin reserves were misused.
As a “beneficiary,” Techteryx invoked the Vandepitte case in an attempt to assert rights despite the contractual obstacles. The Singapore court expressly responded: if you want to exercise rights, you must accept obligations; you cannot sue until you have completed the dispute resolution process agreed in the contract.
Implications for Chinese institutions:
Regulation is becoming increasingly strict. The legality and transparency of the “asset custody + contract governance” structure for stablecoins must be established in advance.
In particular, attention should be paid to the legal role of the “ultimate party instructing the assets” in the contract structure design, so as to prevent hidden beneficiaries from using procedural shortcuts to initiate unauthorized litigation.
Stablecoins Are Entering “Deep Regulatory Waters”: Legal Design Must Advance in Parallel
As stablecoins become an important path for cross-border settlement, Web3 applications, and U.S. dollar alternatives, their legal attributes and operating structures are no longer a gray area, but rather a “risk amplifier” under compliance supervision.
The Techteryx case is not an isolated one. It is a warning: in globalized digital financial contracts, procedural obligations equal substantive rights. Violating procedures may cause a party to lose its legitimacy.
If you are participating in or preparing for cross-border projects involving stablecoins, on-chain payments, custodial investments, or similar matters, you should conduct the following as early as possible:
- legal review of the contract structure;
- a review of multi-jurisdictional dispute mechanisms;
- a risk assessment of potential liability chains.
The China-Singapore Legal News team has assisted a number of Chinese and Southeast Asian digital asset institutions in building compliance solutions and has been involved in several related dispute resolution matters. If you would like to discuss further, please leave a message or contact us privately.
Author | Cross-Border Dispute Resolution Team
This article is for informational reference only and does not constitute formal legal advice.
This article is general information and not legal advice. Specific matters require assessment by appropriately qualified professionals.