We are proud to announce that Angelos Paphitis, Managing Partner at AGPLAW, and Maria Constantinou, Partner of the Disputes team at AGPLAW, have successfully secured a significant injunction in the Cyprus courts.

This victory includes obtaining an international Mareva injunction, freezing assets of the Defendants up to €50 million.

Our client, a UAE entity, acquired loan facilities from a Cyprus company which, in 2019, engaged in a financing agreement with a Cayman Islands Fund to invest in a new blockchain Swiss venture. These loan facilities totalled just over €70 million. However, upon acquisition, our client discovered the investment had collapsed, the project had been cancelled, and fraudulent activities appeared to benefit the fund manager and majority shareholder.

After extensive investigations, it was revealed that the majority shareholder and other associated companies were issuing invoices towards the Fund for services that were never provided. These fraudulent activities led to significant unjust enrichment for the majority shareholder and its associated companies, in clear breach of the loan agreements with the Fund which stipulated that the funds should be used exclusively for the blockchain venture.

Given these breaches, our clients terminated the loan agreements and initiated legal actions to recover the money paid. The legal action included claims for breach of contract following default of the loan agreement, unjust enrichment due to the fraudulent invoices, and the imposition of a constructive trust on any funds received by the majority shareholder or its associated entities.

We are pleased to report that our ex-parte application for a Mareva injunction was granted, effectively freezing the funds and assets of the main defendants up to €50 million. This injunction is critical in ensuring that our clients can secure their financial interests while the case proceeds.

Key Legal Areas Involved

• Breach of Contract. The defendants failed to adhere to the specific provisions of the loan agreements, leading to an event of default.
• Default of Loan Agreement. The collapse of the blockchain venture and misallocation of funds constituted a default on the loan agreement.
• Unjust Enrichment. The defendants issued fraudulent invoices, benefiting financially from services never rendered, thus unjustly enriching themselves.
• Constructive Trust. We claim that any funds received by the majority shareholder or its associated entities are held under a constructive trust for our clients. A constructive trust is an equitable remedy imposed by the court to prevent unjust enrichment. It means that the defendants must hold the misappropriated funds for the benefit of our clients, ensuring that the rightful owners are protected.
• Mareva Injunction. This injunction is a powerful legal tool used to freeze the assets of the defendants to prevent the dissipation of assets before a judgment is made.

The Mareva injunction is a significant achievement as it provides our client with a measure of security and maintains the status quo while the litigation is ongoing.

AGPLAW remains committed to delivering exceptional legal services and achieving the best possible outcomes for our clients. This case is a testament to our dedication, expertise, and the powerful legal strategies we employ.

For all enquiries please contact our team of experts at agp@agplaw.com 

The information provided by AGPLAW | A.G. Paphitis & Co. LLC is for general informational purposes only and should not be construed as professional or formal legal advice. You should not act or refrain from acting based on any information provided above without obtaining legal or other professional advice.