Singapore High Court Rejects Three Arrows Capital Dismissal Request

In a recent legal development that has sent shockwaves through the cryptocurrency industry, the High Court of Singapore has handed down a decision that could have far-reaching implications. The court has refused Three Arrows Capital’s (3AC) request to dismiss a lawsuit brought against it by DeFiance Capital, a move that highlights the complex nature of cryptocurrency asset ownership and control.

The Crypto Asset Conundrum

At the heart of this legal battle is the question of ownership and control over crypto assets. Unlike traditional assets, cryptocurrencies have no physical presence; they exist solely as digital records within a decentralized network of computers. This unique characteristic has created a legal gray area, and DeFiance Capital sought to assert its rights over its crypto assets, which were held on the 3AC platform.

In a decisive ruling, the judge overseeing the case dismissed 3AC’s plea to have the lawsuit thrown out. The court not only denied the dismissal but also mandated that 3AC cover the legal fees incurred by Cheong Jun Yoong, the founder of DeFiance Capital. This ruling underscores the seriousness of the allegations brought by DeFiance Capital.

Independent Control

One of the key arguments put forth by DeFiance Capital was that, despite its assets being on the 3AC platform, it retained independent control over them. Cheong Jun Yoong had a history of managing these assets for a circle of friends and former colleagues. To maintain this independence, DeFiance Capital insisted on the segregation of its funds into separate accounts. This arrangement allowed Cheong to have complete control over the cryptocurrency assets within his fund.

The court’s decision to support DeFiance Capital in its legal action against 3AC sends a strong message about the importance of upholding cryptocurrency asset ownership rights. This ruling emphasizes the need for transparency and accountability in the crypto industry.

This legal battle is not the first time that 3AC has come under scrutiny. In December 2023, 3AC founder Su Zhu faced questioning by lawyers from Teneo, the appointed liquidators. The purpose of these inquiries was to uncover details about 3AC’s failure and the status of its crypto assets. It is worth noting that 3AC collapsed in July 2022, a year marked by several major crypto firm failures.

Su Zhu’s Arrest

Adding to the intrigue surrounding this case, Su Zhu was arrested on September 29 at Changi Airport in Singapore. His arrest was related to his alleged non-cooperation with 3AC’s winding-up process. Zhu’s four-month detention raised questions about the extent of his involvement in the company’s affairs. However, he was released in December 2023, further complicating the ongoing legal battle.

Notably, authorities also issued a similar order against another 3AC co-founder, Kyle Davies. As of now, efforts to locate him have been unsuccessful, deepening the mystery surrounding 3AC’s collapse and the whereabouts of its crypto assets.