In Singapore, hearings on assets linked to 3AC worth $141 million

The Singapore court will hear a dispute between DeFiance Capital and the firm Teneo, representing the interests of the liquidators of the crypto fund Three Arrows Capital (3AC), regarding assets worth $141 million. According to The Block.

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The proceedings will take place in Singapore, despite the wishes of the law firm.

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“We welcome the decision, as it ensures that important evidence located in this jurisdiction will be available for the purposes of a fair and efficient resolution of the dispute,” said Blossom Hing of Drew and Napier, representing DeFiance Capital.

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The dispute concerns assets managed by DeFiance Capital. The fund was operationally independent from Three Arrows Capital, but was part of the corporate structure.

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The liquidators contend that the funds should be held as part of 3AC’s assets and distributed among creditors. DeFiance Capital insists that the assets should be treated separately and returned to the fund’s investors, according to court documents.

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The assets include $115 million in cryptocurrencies and NFTs, as well as 69 SAFE/SAFT agreements.

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The liquidators say the total amounts to $141 million, while DeFiance Capital puts it at more than $120 million. Valuations differ because the mentioned agreements are difficult to value.

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A similar dispute is also before the British Virgin Islands court. Consequently, the proceedings may run in parallel and lead to two different rulings on the same issue.

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DeFiance Capital was founded in 2020 in Singapore by Arthur Chen. The firm previously positioned itself as a \”sub-fund\” of 3AC with a different class of shares. DeFiance Capital had its own officers and staff, and its founder had autonomy in making investment decisions. The fund paid part of its management fees to Three Arrows Capital under an agreement.

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In February 2022, 3AC co-founders Kyle Davies and Su Zhu told Chen that they planned to move to Dubai, inviting him to join them, according to court documents. Chen declined and initiated the removal of DeFiance Capital from the 3AC structure. This led to the creation in May of two Singaporean entities.

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In May, the firm lent 3AC $35 million in USDC.

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In June, Davies and Su Zhu transferred certain legal rights relating to DeFiance Capital to its newly formed companies. 3AC also transferred crypto assets and NFTs—excluding borrowed funds—to one of the firms outside the hedge fund’s structure. The migration could not be completed before Three Arrows Capital filed for bankruptcy.

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In July 2022 the distanced itself from 3AC and announced its operational independence.

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In March 2023, DeFiance Capital attracted an \”eight-figure sum\” of investments, according to the media.

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As reported, information about insolvency of 3AC amid a collapse in the cryptocurrency market and the Terra crash.

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In July 2022, a user who described themselves as a creditor of the liquidated hedge fund said that the total amount of Three Arrows Capital’s outstanding liabilities had reached $2.8 billion.