Singapore High Court Rules Against 3AC in DeFiance Capital Lawsuit
Date: 2024-02-01 Author: Dima Zakharov Categories: IN WORLD
Singapore High Court's Verdict on DeFiance Capital Lawsuit
In a landmark ruling, the Singapore High Court has rejected Three Arrows Capital's (3AC) request to dismiss the lawsuit filed against them by Chong Jun Yong, also known as Arthur Cheong, the founder of Web3 DeFiance Capital. Cheong filed the lawsuit in April 2023, alleging that DeFiance Capital investors are the ultimate beneficiaries of assets held in trust by 3AC and that 3AC should not use these funds to satisfy creditor demands.
Settlement with 3AC Founders
The plaintiff reached an agreement with 3AC founders, Su Zhu and Kyle Davies, to establish an "independent and autonomous fund on the 3AC Group platform, owned and controlled by the plaintiff." This fund had access to 3AC's resources, such as middle and back-office infrastructure, fund administrators, and auditors.
Formation of DeFiance Capital
The fund, later named DeFiance Capital, maintained separate accounts and wallets in Cheong's name and paid Zhu and Davies a 25% commission on fund fees collected. As of May 2022, DeFiance Capital held 22.3 million USDT and 93.8 million USD in other cryptocurrencies and fiat currencies. 3AC created sub-accounts for DeFiance Capital on their FTX and Binance accounts, along with a dedicated workspace on the 3AC Fireblocks custody platform.
3AC's Bankruptcy and Legal Battle
3AC declared bankruptcy in July 2022, and the Singapore High Court allowed DeFiance Capital to sue for 3AC's remaining assets, still under 3AC's control, in November. On the same day, 3AC filed counterclaims.
The court determined that the cryptocurrency in Fireblocks wallets, which remained under 3AC's control, was held in trust despite 3AC's claims of an unfounded lawsuit. Singapore was the appropriate jurisdiction for the case due to the individual controlling the wallet keys residing there, and the country had sufficient ties under Singaporean law.
