The Singapore High Court has denied the insolvent cryptocurrency hedge fund Three Arrows Capital (3AC) its motion to dismiss a lawsuit filed by Arthur Cheong. Cheong alleged that assets held in trust by 3AC’s ultimate beneficial owners should not be utilized to settle claims from creditors of the 3AC estate. Despite attempts by 3AC to have the case dismissed, the court ruled against them.
Following an agreement between Su Zhu, Kyle Davies, and Cheong, a separate autonomous fund was established on the 3AC Group platform under Cheong’s ownership and management. This fund had access to 3AC’s resources, including auditors and fund administrators.
DeFiance Capital accounts held substantial assets in May 2022, with 22.3 million USDT and $93.8 million in fiat and other cryptocurrencies. However, when 3AC relocated its headquarters to Dubai in 2022, DeFiance Capital was separated into two distinct firms in Singapore. The court did not disclose the value of assets withheld from DeFiance Capital during this transition.
Despite 3AC’s assertions, the court found that cryptocurrency held in Fireblocks wallets controlled by 3AC was held in trust. Additionally, Singapore was deemed the appropriate venue for the lawsuit under Singaporean law due to its nexus with individuals possessing wallet keys residing in the nation.