Singapore High Court has rejected an application by failed crypto hedge fund Three Arrows Capital (3AC) to dismiss a claim brought by Cheong Jun Yoong, founder of investment firm Web3 DeFiance Capital. DeFiance Capital argued that its assets and operations were separate from those of 3AC and should not be included in the liquidation process. Cheong filed suit against Three Arrows Capital in April 2023, alleging that DeFiance Capital investors were the ultimate beneficiaries of assets held in trust by Three Arrows Capital.
The fund, eventually called DeFiance Capital, had separate accounts in Cheong’s name. He paid Davies and Zhu 25% commissions. As of May 2022, the fund held 22.3 million USDT and US$98 million in other cryptocurrencies and fiat. In addition, 3AC has created sub-accounts for DeFiance Capital on its FTX and Binance accounts, as well as a separate workspace with custodial provider 3AC Fireblocks. DeFiance Capital was eventually transferred from 3AC when 3AC moved its headquarters to Dubai in 2022. However, some assets were not transferred to DeFiance Capital in accordance with the previous agreement.
3AC filed for bankruptcy in July 2022, and the Singapore High Court allowed DeFiance Capital to sue 3AC’s estate to recover assets. On the same day, 3AC filed a counterclaim. The court found that the cryptocurrency held in the Fireblocks wallet, which remained under the control of 3AC, was held in trust, despite 3AC’s protests. When 3AC filed for bankruptcy, liquidators assumed control of 3AC’s assets and stated that 3AC and DeFiance Capital acted as one entity. However, WassieLawyer explained in a post on X that DeFiance Capital only used the 3AC legal structure, for which it paid a commission. However, DeFianceCapital never merged its activities with 3AC.
Image: COINTURK
