Singapore High Court Recognizes Trust Relationship in Crypto Assets Dispute
The High Court of Singapore recently ruled in favor of Arthur Cheong, the founder of DeFiance Capital, in a lawsuit against bankrupt cryptocurrency hedge fund Three Arrows Capital (3AC). The court acknowledged a valid trust relationship between DeFiance Capital and 3AC, affirming that the disputed assets were held in trust for DeFiance Capital’s investors. This decision comes after Cheong filed a lawsuit in April 2023, arguing that the assets should not be used to settle creditor claims against 3AC.
Background of the Legal Battle
The legal dispute originates from an agreement between Cheong and 3AC founders Su Zhu and Kyle Davies to launch an independent fund on the 3AC Group platform. Despite 3AC’s collapse and subsequent bankruptcy, DeFiance Capital was permitted by the Singapore High Court to sue 3AC’s estate to recover assets still under its control. The court determined that the cryptocurrency held in Fireblocks wallets, controlled by 3AC, was held in trust for DeFiance Capital.
Significance of the Ruling
This ruling holds significance as it recognizes the trust relationship in the context of cryptocurrency assets and establishes the jurisdiction of Singaporean courts in such disputes. It highlights the legal complexities surrounding ownership and control of digital assets in the crypto landscape. The decision also sheds light on the challenges faced by investors and fund managers in asserting their rights over digital assets, especially when dealing with bankrupt entities.
Hot Take: Upholding Investor Rights in Crypto Asset Disputes
Singapore’s High Court ruling sets an important precedent by upholding investor rights in cryptocurrency asset disputes. By recognizing the trust relationship between DeFiance Capital and Three Arrows Capital, the court affirms the legal protection of investors’ interests in the evolving crypto landscape. This decision serves as a reminder that trust law applies to digital assets, providing clarity and guidance for future cases involving the control and ownership of cryptocurrencies. It also highlights the need for investors and fund managers to carefully consider the legal implications and protections when dealing with crypto assets.
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