The legal tussle between DeFiance Capital and Three Arrows Capital (3AC) has reached a new milestone as the Singapore High Court stands firm in its decision to reject 3AC’s motion to dismiss a lawsuit filed by Arthur Cheong, founder of DeFiance Capital. This latest development underscores the ongoing complexities in the crypto space regarding asset ownership and trust.
The Heart of the Dispute
Initiated in April 2023, Arthur Cheong’s legal action contends that DeFiance Capital investors are the legitimate beneficiaries of assets purportedly held in trust by 3AC. The lawsuit arose from an agreement that aimed to establish DeFiance Capital as an independent fund within the 3AC Group, which later led to a disagreement over the transfer of certain assets, a matter that has become a focal point in the courtroom.
Legal Developments and Implications
Navigating through the bankruptcy aftermath of 3AC, the Singapore High Court, in November 2023, allowed DeFiance Capital to move forward with its lawsuit, seeking to reclaim assets under 3AC’s control. This was a significant turn, bolstered by the court’s acknowledgment of a trust over the crypto assets, despite 3AC’s dismissal claims. The court’s decision, recognizing Singapore’s jurisdiction, offers a beacon of hope for Cheong and his firm.
3AC’s Downfall and DeFiance’s Stand
Formerly a top crypto hedge fund, 3AC’s downturn was attributed to its investments in Terra, staked Ethereum, and Grayscale’s Bitcoin Trust. DeFiance Capital, on the other hand, established in 2020, continues to focus on decentralized finance and GameFi, backing notable projects and maintaining its operational independence despite utilizing 3AC’s legal framework for a fee.
Current Status and Future Prospects
With the legal proceedings gaining momentum, the focus is now on the substance over form debate, which may favor DeFiance’s position on its actual operations. The crypto community is closely watching as the case unfolds, with the recent release of 3AC co-founder Su Zhu and the ongoing search for Kyle Davies adding to the saga’s complexity.
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