TROOPS, Inc.: Navigating Legal Storms and Nasdaq Compliance – A High-Stakes Gamble?

The legal and financial landscape for TROOPS, Inc. (NASDAQ: TROO) has grown increasingly turbulent in 2025, with a landmark Hong Kong court ruling, a Nasdaq compliance warning, and a strategic stock deal complicating its path forward. For investors, the question is whether the company can turn these challenges into opportunities—or if they signal a deeper vulnerability.

The recent legal judgment, handed down by the Hong Kong High Court on June 23, 2025, demands TROOPS and its subsidiaries pay HK$404.8 million (US$51.9 million) in damages for alleged fraudulent restructuring and conspiracy. The case, brought by FTI Consulting as liquidators, accuses the company of transferring low-value assets like Boca International Limited to shield them from creditors. TROOPS has rejected the ruling as “meritless,” vowing to appeal and even launch a U.S. class-action lawsuit against FTI, claiming malicious prosecution that harmed shareholders.

The stakes are high. If the appeal fails, the judgment could drain TROOPS's liquidity, especially given its already strained financial position. The company has yet to quantify the exact impact, but the sum represents roughly 10% of its 2023 revenue of HK$3.9 billion. A reveals a precipitous decline—from a high of $3.50 in early 2024 to below $0.80 in June 2025—exacerbating its Nasdaq non-compliance warning. The exchange requires TROOPS to lift its stock above $1 by October 28, 2025, or face delisting.

To address this, TROOPS has struck a deal with Wang & Lee Holdings, agreeing to sell 14.05 million shares for $12.6 million. The transaction, which includes a 10-year lock-up period, aims to stabilize its share price and secure capital for ESG initiatives and tech upgrades. However, the move dilutes existing shareholders, raising questions about long-term value.

On the operational front, TROOPS's diversified portfolio—spanning money lending, property, fintech, and migration services—could offer resilience. Its fintech division, in particular, has shown growth potential, though it remains overshadowed by legacy issues in its traditional lending and property businesses. A might reveal whether newer sectors are offsetting declines in core operations.

Investors must weigh two critical variables: the legal appeal's outcome and the Nasdaq compliance timeline. A successful appeal could erase the financial overhang and restore investor confidence, while a failed appeal might force TROOPS into a liquidity crisis. Meanwhile, the stock purchase's timing is critical—shareholders must see a price rebound before October, or the company will face existential risks.

The class-action lawsuit against FTI adds another layer of complexity. If TROOPS can demonstrate that FTI's actions harmed shareholder value, it might recover damages or secure a settlement that mitigates losses. However, such lawsuits are often protracted and uncertain, further testing the company's resources.

For now, TROOPS presents a high-risk, high-reward proposition. Investors with a long-term horizon and tolerance for volatility might view it as a contrarian play: a potential turnaround candidate if legal and regulatory hurdles are cleared. Yet, with shares trading at historic lows and the October deadline looming, even a favorable ruling may not be enough without sustained operational improvements.

In conclusion, TROOPS, Inc. is at a pivotal crossroads. Its ability to navigate the Hong Kong legal system, execute its Nasdaq compliance plan, and capitalize on growth areas like fintech will determine whether it can rebound—or become another casualty of corporate missteps. For investors, this is not a buy-and-hold stock but a speculative bet on legal and financial alchemy. Proceed with caution.