Is Cake cooked? Founder clashes, liquidation loom over crypto firm

With additional reporting by Candice Lee

The fate of Bake, a crypto exchange that once claimed to manage US$1 billion in assets, now rests in the hands of a Singapore judicial commissioner who will determine whether its parent firm, Cake Group, should be liquidated.

On April 12, Judicial Commissioner Alex Wong of Singapore’s High Court heard arguments on whether to grant the winding-up application filed by U-Zyn Chua, a co-founder and director of Cake Group. Chua was also Bake’s former chief technology officer.

Photo credit: Cake Group

Bake was previously known as Cake DeFi before the company rebranded in June 2023.

If Wong grants Chua’s application, it would be a stunning end to a crypto firm that saw US$631 million in revenue in 2021.

Complicating matters is the escalating conflict between Cake Group’s co-founders that has led to investigations by the police and the Ministry of Manpower into the company, though neither agency has announced their findings.

Because of this and Cake Group’s seeming resistance to the crypto winter, Chua’s request for liquidation caught the crypto community by surprise. While the company did lay off approximately 30% of its staff in November 2023, there are no claims of insolvency and no accounts have been frozen for lack of funds – common signs that a crypto exchange is facing financial distress.

In its 2022 financial statement, Cake Group claimed to have finished the year with US$36.5 million in cash and cash equivalents, US$47 million in stablecoins, and US$70.6 million in digital assets.

Why liquidate?

So why is Chua seeking to wind up the company? Wong asked him that question several times during the April 12 hearing.

While Chua’s lawyers gave several answers, the main reason seems to be a rift between Chua and Julian Hosp, one of Cake Group’s co-founders and its current CEO. Hosp was also the firm’s only other director until Benjamin Zumbrunn’s appointment in January.

Cake Group co-founders Julian Hosp (left) and U-Zyn Chua in 2022 / Photo credit: Cake Group

Details surrounding the co-founders’ falling out emerged at last week’s hearing. Chua and Hosp began to fight in October 2023 about upcoming layoffs at Cake Group. According to insiders, Chua was unhappy about the number of cuts being made in the engineering section and his exclusion from the selection process.

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