Dispute Escalates DeFiance Capital and Teneo Clash over $115M 3AC's Assets

Dispute Escalates: DeFiance Capital and Teneo Clash over $115M 3AC’s Assets

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In a courtroom showdown that spans continents, DeFiance Capital and Teneo, the appointed liquidators of the beleaguered hedge fund Three Arrows Capital, are locked in a high-stakes battle set to unfold in Singapore. This contentious dispute over $115 million worth of assets has captured the attention of the financial world, as conflicting claims collide.

Divergent Visions: Dueling Claims

Teneo raises a resounding contention, asserting that the assets currently under the purview of DeFiance Capital should rightfully belong to 3AC’s estate. Their argument pivots on the premise that these assets must be duly distributed to the fund’s creditors. On the opposing front, DeFiance Capital stands firm, advocating for a separate treatment of its funds. They ardently advocate for the assets to be returned to their original investors, insisting on their autonomy.

Origins and Complexity

The seeds of this discord were sown in the corporate realms of 3AC, where DeFiance Capital found its genesis in 2020. Within the intricate tapestry of 3AC’s corporate structure, DeFiance Capital carved out its own distinctive share class, setting the stage for the ensuing legal tussle. With its own dedicated office and an autonomous decision-making team, DeFiance Capital even dutifully extended a portion of its management fee to 3AC, in alignment with their established agreement.

Cryptocurrencies, NFTs, and Contractual Quandaries

Central to the dispute are assets of considerable magnitude, collectively valued at a staggering $115 million. Within this financial tapestry lie a myriad of cryptocurrencies, non-fungible tokens (NFTs), and a complex web of SAFE (Simple Agreement for Future Equity) and SAFT (Simple Agreement for Future Tokens) contracts, each bearing the imprimatur of 3AC’s involvement.

Jurisdictional Jostle: Singapore vs. British Virgin Islands

The crucial question of jurisdiction adds another layer of complexity to this multifaceted legal clash. Presiding Judge Chua Lee Ming has decisively ruled that the battleground for this confrontation shall be in Singapore. DeFiance Capital’s presence in the country and the funds’ domicile therein appear to have weighed significantly in this determination. Conversely, Teneo contends that the legal proceedings should be anchored in the British Virgin Islands, the very crucible in which the fund’s foundational structure was forged.

Teneo’s Role and Liquidation Mandate

Teneo emerges as an independent arbiter, tasked with the arduous responsibility of overseeing the intricate liquidation process of Three Arrows Capital (3AC). This role, bestowed upon them by the British Virgin Islands Court, encompasses the sale of substantial portions of 3AC’s estate. Notably, Teneo’s efforts have already yielded sizeable transactions, including the sale of valuable blue-chip NFTs.

As this legal duel commences, the financial world awaits the unfolding of a saga that intertwines complex contractual nuances, cross-border jurisdictional debates, and a substantial trove of digital assets. The outcome of this dispute carries the potential to reshape precedents and carve new contours in the realm of digital finance and legal jurisprudence.

Genesis, NFT, Three Arrow Capital