The High Court of Singapore has granted permission for DeFiance Capital’s legal action against the bankrupt crypto hedge fund, Three Arrows Capital (3AC), to proceed. The dispute revolves around whether funds held by 3AC were in trust for DeFiance Capital or belonged to the insolvent crypto hedge fund.
Court Rejects Dismissal Plea by 3AC
Three Arrows Capital had sought to dismiss the lawsuit brought forth by Arthur Cheong, the founder of Web3 investment firm DeFiance Capital. Cheong had filed a suit in April 2023, asserting that DeFiance Capital investors were the ultimate beneficial owners of assets held in trust by 3AC. The court rejected 3AC’s application to dismiss the case, allowing the legal proceedings to move forward.
The Complex Relationship and Asset Transfer
Cheong had reached an agreement with 3AC founders Su Zhu and Kyle Davies to establish an independent fund on the 3AC Group platform. This fund, later named DeFiance Capital, operated with segregated accounts and wallets in Cheong’s name. However, when 3AC declared bankruptcy in July 2022 and relocated its headquarters to Dubai, certain assets were not transferred to DeFiance Capital as agreed. The court decision emphasized that the crypto held in the Fireblocks wallets, still under 3AC control, was deemed to be in trust.
The Singapore High Court’s decision to allow DeFiance Capital’s lawsuit against 3AC to proceed signifies a pivotal moment in the ongoing legal battle. The complex nature of the relationship between the parties and the contested transfer of assets adds layers to the dispute. As the legal proceedings unfold, the crypto community will be keenly observing the outcome and its potential implications for the broader industry.