Hong Kong’s SFC appeals to digital asset investors to verify licenses

In the ongoing legal tussle over cryptocurrency assets, the High Court of Singapore has rejected a plea by the bankrupt crypto hedge fund Three Arrows Capital (3AC) to dismiss a lawsuit filed by Arthur Cheong, the founder of Web3 investment firm DeFiance Capital. This ruling represents a pivotal moment in the $140 million dispute, shedding light on the ownership and control of assets, while building upon DeFiance Capital’s previous success back in August of last year in having its preference for jurisdiction in Singapore endorsed.Photo by Tingey Injury Law Firm on UnsplashRecognizing assets held in trustOn Jan. 26, a Singapore judge ruled against 3AC's request to have Cheong’s claim thrown out, stating that DeFiance Capital has adequately demonstrated the existence of a Singapore-based trust safeguarding its assets. This revelation could potentially shield DeFiance Capital from 3AC's liquidators, marking a crucial juncture in the legal battle. The dispute traces back to an agreement where Cheong was set to launch an independent fund on the 3AC Group platform, with ownership and control vested in DeFiance Capital. This fund, leveraging 3AC's infrastructure, faced disagreements over the transfer of certain assets, whose undisclosed value became a point of contention in court documents. The downfall of the $10 billion 3AC hedge fund, responsible for the "Super Cycle" thesis predicting perpetual crypto price increases, had widespread repercussions in the crypto industry. DeFiance Capital bore the brunt of this collapse and the recent court ruling brings the firm closer to resolving the aftermath favorably. The ongoing argument holds strategic importance for DeFiance Capital, as the investment firm challenges any legal obligation for its shareholders to compensate 3AC creditors. "Wassielawyer," a pseudonymous restructuring attorney advising DeFiance Capital's founder Arthur Cheong, highlighted the significance of this stance on social media. Positive signThe judge's acknowledgment of the trust, while not conclusive, is viewed as a positive sign for DeFiance Capital. In a series of posts on the X social media platform, Wassielawyer outlined on Thursday that he sees this as "much-needed vindication" for Cheong, signaling a potential turn in favor of the investment firm. Wassielawyer emphasized that DeFiance Capital merely utilized 3AC's legal structure, without commingling operations. This distinction becomes crucial as carefully drafted legal documents form the basis for 3AC creditors attempting to seize DeFiance Capital funds. The restructuring professional added:”[DeFiance Capital] have on the basis of the substantive facts, ran an argument that the assets of DCs should not be used to pay back 3AC creditors. This eventuality would be manifestly unjust, enriching the creditors of 3AC at the expense of innocent DC investors.” Once a major player in the crypto hedge fund arena, 3AC's demise resulted from exposure to Terra, staked Ethereum and Grayscale's Bitcoin Trust. The bankruptcy filing on June 30, 2022, marked the end of an era for the once-mighty fund. Established in 2020, DeFiance Capital specializes in crypto investments, focusing on decentralized finance and GameFi. It has supported projects such as dYdX, Aave and Lido. This decision establishes a precedent for similar cases, particularly in jurisdictions like Singapore, emerging as pivotal hubs for cryptocurrency and blockchain-related activities. The outcome holds implications for how such legal disputes will be handled in the future, shaping the landscape of crypto-related legal proceedings. 

Metaplanet, a Japanese Bitcoin treasury company listed on the Tokyo stock exchange, is targeting a holding of 10,000 BTC in 2025.2025 targetTaking to the X social media platform on Jan. 5, the company’s CEO, Simon Gerovich, set out a number of objectives which the company will strive to reach in 2025. Among them is the objective to expand the company’s Bitcoin holdings to 10,000 BTC. Gerovich said that the expansion of the firm’s Bitcoin holding would be achieved “by utilizing the most accretive capital market tools available to us.” He followed up on Jan. 6 with an announcement that Metaplanet has completed its 12th series stock acquisition rights. Gerovich claimed that the successful completion of the stock issuance marked “a milestone in Metaplanet’s financing and Bitcoin acquisition strategy.” The 12th series stock issuance was first announced back in November, with a six-month exercise period opening on Dec. 17. Additionally, the company issued 4.5 billion yen ($28,562,451) and 5 billion yen ($31,736,057) in ordinary bonds, with a maturity date of June 2025. Other objectives the company has set out for 2025 include enhancing transparency and shareholder engagement through new initiatives. Furthermore, Metaplanet intends to leverage its partnerships to advance Bitcoin adoption in Japan and further afield. Gerovich said that Metaplanet will explore innovative opportunities to grow the firm’s impact in Japan and within the Bitcoin ecosystem.Photo by Vasilis Chatzopoulos on Unsplash2024 ‘transformational’The Metaplanet CEO claimed that 2024 had been “transformational” for the company. He added: “We broke records, expanded our Bitcoin treasury, and reinforced our position as Asia’s leading Bitcoin Treasury Company.” Shifting its attention to 2025, the firm is focused on its efforts to drive greater value for shareholders. Metaplanet’s fortunes are now heavily dependent upon the performance of Bitcoin. In an interview at a New Year’s Eve party held in Miami by Microstrategy founder Michael Saylor, Gerovich commented on Bitcoin adoption, stating:"I’m slowly but surely seeing Bitcoin becoming a topic of discussion at the highest levels of government. Corporations around the world are beginning to adopt it as a Bitcoin standard." The Metaplanet CEO is optimistic that the U.S. will adopt a strategic Bitcoin reserve once the Trump administration commences. Should that happen, he believes that other countries will follow. He sees Japan as one of those countries where they do look to the U.S. as a guide on such matters. “So I think if President Trump does adopt it as a strategic reserve, then Japan and many countries in Asia will do the same,” he stated. Metaplanet is understood to be pursuing a business model very similar to the one pioneered by Microstrategy in the United States. The company increased the rate at which it acquired Bitcoin in H2 2024. Metaplanet made its first Bitcoin purchase in April 2024. At that time, its stock was trading at $1.90. Just as the Bitcoin unit price surged, so too did Metaplanet stock, closing the year at $22.05 per share.

Korean government to seize crypto for unpaid child supportStarting next year, the South Korean government is set to begin seizing virtual assets such as bitcoin from parents who are obligated to pay child support but fail to do so.Photo by Bonnie Kittle on UnsplashKorea Credit Bureau to assist in crypto seizuresAccording to a report by local news outlet Dailian, the Child Support Agency (CSA) of the Korean Institute for Healthy Family (KIHF), which operates under the Ministry of Gender Equality and Family, announced on Wednesday (local time) a partnership with the Korea Credit Bureau (KCB). This collaboration will empower the agency to confiscate virtual assets from parents who are delinquent in paying child support.Since 2015, the CSA has been offering emergency child support for approximately a year to low-income single parents who have not received payments from non-custodial parents. In this process, the agency initially pays the child support on behalf of the non-custodial parents and subsequently pursues reimbursement from them. This system ensures that the immediate needs of the children are met while still holding non-custodial parents accountable for their financial responsibilities.Before July 2022, the CSA was required to initiate lawsuits against non-compliant parents to recover child support payments. However, since then, the agency has been authorized to directly pursue reimbursements by following the compulsory national tax collection process.Challenges in enforcing child support paymentsDespite these improved measures, the government still encountered challenges in enforcing child support payments. Some non-compliant parents have resorted to earning income under other people’s names or deliberately concealing their properties, including virtual assets, to evade their child support obligations.Against this backdrop, the recent partnership between the CSA and the KCB is a strategic move to enhance the enforcement of child support payments. This collaboration will grant the CSA access to KCB’s virtual asset management system. With this access, the CSA will be able to efficiently search for and seize the cryptocurrency holdings of non-compliant parents.Jeon Joo-won, the head of the CSA, underlined the significance of the agency’s collaboration with the KCB. She pointed out that utilizing KCB’s financial transaction data will improve the CSA’s enforcement of child support payments. Jeon also emphasized that the mutual support between the two agencies will serve as a foundation for promoting social values, highlighting the broader societal impact of their combined efforts to ensure responsible child support compliance.