DeFiance Capital Wins in Lawsuit Against Defunct Crypto Fund 3AC in Singapore

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Sujha Sundararajan

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Sujha Sundararajan

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February 1, 2024

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The High Court of Singapore turned down plea from the now-defunct crypto hedge fund Three Arrows Capital (3AC) to dismiss DeFiance Capital’s lawsuit filed against the fund.

In a recent hearing, Judge Chua Lee Ming gave greenlight to Defiance Capital in its $140 million dispute with 3AC. Further, the court ordered 3AC to pay SG$15,000 and legal disbursements to DeFiance Capital.

A former restructuring attorney, who goes by the pseudonym WassieLawyer, wrote series of posts on X (Twitter), explaining the case. He has been working with DeFiance Capital founder Arthur Cheong on the case.

1/ A decision relating to @DeFianceCapital's lawsuit against 3AC in Singapore has just been made public and contains some interesting points around the treatment of cryptoassets and trust relationships.

For context, I have been working with @Arthur_0x on this for the past year.

— wassielawyer （哇西律师） (@wassielawyer) January 31, 2024

DeFiance Capital’s Dispute Against 3AC

For the past year, DeFiance Capital has been locked in a dispute with the beleaguered 3AC, that filed for Chapter 11 bankruptcy on June 30, 2022. The hedge fund claimed that the investor’s assets belong to the 3AC and should be paid to creditors of 3AC.

Arthur Cheong wrote in a recent blog post that his company has been trying hard to help the liquidators of 3AC understand that “DeFiance Capital have exclusive, unfettered control and beneficial ownership over its assets.”

The court declared that though Cheong’s assets were placed on 3AC platform, he had an independent control over it. In the legal pursuit against 3AC firm, DeFiance gained full support from the court. According to WassieLawyer, the move brings some “much-needed vindication” for Cheong.

“We are Delighted”: Cheong

The Court announced in October, 2023 that it will take forward the dispute, against the will of the 3AC liquidators. The liquidators argued that assets locked at DeFiance Capital must be included in the 3AC bankruptcy estate for distribution to creditors.

Per the hearing last year, the Judge pointed out the importance of evidence related to DeFiance Capital founder’s assets control. Judge Ming also emphasized the location where the DeFiance’s assets were held, and the creation of the Trust in Singapore.

Following the hearing, Cheong posted in social media, “We are delighted that High Court of Singapore agreed with our position.” He added that, though both 3AC and DeFiance Capital were based out of Singapore, the liquidators insisted that the dispute be resolved in the British Virgin Islands.

“Our position was that all the important witnesses and documents are in Singapore. The dispute ought to be heard by the Singapore Courts to ensure all relevant evidence would be available,” Cheong noted.