Crypto hedge fund BKCoin fired co-founder Kevin Kang in October for allegedly misappropriating $12 million in assets from three multi-strategy funds, according to filings with U.S. Circuit Court in Florida. The documents, in the 11th circuit court covering Miami-Dade County, date back to Oct. 28 but have largely gone unnoticed.

Miami-based BKCoin was founded in 2018 by Carlos Betancourt and Kang, and claimed $150 million in assets, according to a Business Insider profile in June. The firm oversees at least five funds – including three multi-strategy funds – and multiple separately managed accounts. The multi-strategy funds at the heart of the court case have six U.S. and foreign businesses as its investors, which have collectively invested over $18 million they now hope to recover, according to the court documents.

On Oct. 28, the firm’s core legal entity, BKCoin Management LLC, filed a complaint with the circuit court that alleged Kang had improperly diverted and/or commingled $12 million in cash and other assets out of the multi-strategy funds. BKCoin had terminated Kang’s employment on Oct. 14 but wasn’t sure if he still had access to the accounts.

BKCoin filed an emergency petition for a receiver, a court-appointed neutral party who is given custody of disputed assets. BKCoin claimed it lacked the financial or staff resources to manage the funds itself. Michael I. Goldberg, a lawyer from the firm Ackerman LLP, was quickly appointed as a temporary receiver tasked with overseeing and winding up the funds.

Goldberg’s preliminary look at the assets showed that capital deposited in the multi-strategy funds on behalf of investors was immediately transferred into the accounts of three affiliated legal entities and combined with their assets. Those entities – BKCoin Management LLC, BKCoin Capital LP and BK Offshore Fund Ltd – were all at some point under Kang’s control. The court expanded Goldberg’s purview to cover those entities and later confirmed his power to transfer any crypto assets to a depository account and/or to liquidate (or convert cryptocurrency into U.S. dollars), if needed to preserve value.

Goldberg has to submit a report to the court on or before Jan. 4 that outlines the steps taken, the amounts of all assets and liabilities of the funds and affiliated entities and whether he thinks the funds could continue to operate in a legal and profitable fashion. An initial case management conference will be held on Jan. 27.

BKCoin did not immediately respond to a request for comment.

Read more: 2022 – Crypto Markets: A Year in Review