The High Court of Singapore has rejected an application by bankrupt crypto hedge fund Three Arrows Capital (3AC) to dismiss a lawsuit brought against it by Cheong Jun Yoong.
The High Court of Singapore has rejected an application by bankrupt crypto hedge fund Three Arrows Capital (3AC) to dismiss a lawsuit brought against it by Cheong Jun Yoong, who goes by Arthur_0x on X (formerly Twitter), the founder of Web3 investment firm DeFiance Capital. The court found that there was a valid trust relationship between DeFiance Capital and 3AC, and that the assets in question were held in trust for DeFiance Capital's investors.
Cheong filed the lawsuit in April 2023, claiming that DeFiance Capital investors were the ultimate beneficial owners of assets held in trust by 3AC. He argued that the 3AC estate should not use those funds to satisfy creditor claims against it.
When Cheong was launching DeFiance Capital, he had reached an agreement with 3AC founders Su Zhu and Kyle Davies to launch an independent fund on the 3AC Group platform, which would be owned and controlled by Cheong. The fund had access to 3AC resources and operated with segregated accounts and wallets in Cheong's name.
When 3AC moved to Dubai to set up its new headquarters, DeFiance Capital was transferred out and incorporated as two entities in Singapore. However, certain assets were not transferred in accordance with the previous agreement. 3AC declared bankruptcy in July 2022, and the Singapore High Court allowed DeFiance Capital to sue the estate of 3AC to recover assets still controlled by 3AC in November. 3AC filed counterclaims on the same day.
The court established that the crypto in the Fireblocks wallets that remained under 3AC control was in trust, despite 3AC's claims that the claim was meritless.
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