DeFiance Capital notches up another legal victory in 3AC dispute

State-Owned Newspaper to Launch NFT Platform in ChinaChinese government-owned media outlet China Daily, under the guidance of the Publicity Department of the Chinese Communist Party, has allocated a substantial budget of 2.813 million yuan (equivalent to $390,000) for the development of an NFT platform.Photo by Hanson Lu on UnsplashInviting bids from home and abroadThe move will open the door to both domestic and international blockchain technology firms, inviting them to spearhead the creation of the platform. According to a public tendering announcement published last month, the chosen firm must operate on a blockchain mainnet capable of handling over 10,000 transactions per second, ensuring top-notch performance and reliability.One of the platform’s key features will be its user-friendly interface, allowing users to effortlessly upload, display, and manage their digital collections. It will support a wide range of multimedia formats and diverse collection types, making it a versatile hub for creative expression. Additionally, the platform will offer advanced functionalities like pricing, bidding, limited-time offers, and multi-currency settlement to ensure a comprehensive and satisfying user experience.Extending the reach of Chinese cultureThe core objective of the China Daily NFT Platform is to amplify the global influence of Chinese culture by seamlessly blending technology and culture in the metaverse. This ambitious strategy integrates cutting-edge technologies such as virtual reality (VR), augmented reality (AR), mixed reality, blockchain, non-fungible tokens (NFTs), big data, and cloud computing.In an effort to expand the global reach of their digital collections, China Daily intends to collaborate with both domestic and international mainstream NFT platforms. This ambitious plan includes partnerships with well-known foreign platforms such as OpenSea, Rarible, SuperRare, and Foundation. Despite the rigorous regulatory landscape and scrutiny that blockchain entities face in China, this approach aims to make Chinese digital collections more accessible to a global audience.The urgency and importance attached to this project are evident in the tight timeline set by China Daily. The chosen contractor must submit their application by October 17 and complete the development of the platform within three months, highlighting the publication’s commitment to this venture.NFT platform development despite crypto banHowever, it’s important to acknowledge that this initiative unfolds within the backdrop of stringent cryptocurrency regulations in China. Since 2021, although NFTs have not been banned, all forms of cryptocurrency transactions have been prohibited in the country, and blockchain entities operating within China face intense regulatory oversight.In May the Supreme People’s Procuratorate of China issued a warning relative to NFTs on the basis that they have crypto-like properties. However, the agency also acknowledged that NFTs do present a novel application of blockchain technology.Recent events, including the detention of former China Evergrande executives Xia Haijun and Pan Darong for alleged involvement in fraudulent activities, underscore the strict regulatory environment prevailing in China.Within the Chinese autonomous territory of Hong Kong, the South China Morning Post (SCMP) spun out Artifact Labs, an NFT company, following an initial decision in 2021 to launch an NFT standard called artifact.China Daily’s foray into the NFT space demonstrates that some facets of blockchain innovation are being leveraged within China, in this instance with a view towards cultural promotion and global engagement.

DeFiance Capital Secures Interim Victory in Dispute With 3ACSingapore’s DeFiance Capital, a Web3 and crypto investment firm, has notched up a small triumph in its ongoing $140 million legal clash with failed Singaporean crypto hedge fund, Three Arrows Capital (3AC).Photo by Sasun Bughdaryan on UnsplashFavorable rulingAccording to a statement provided via a Medium blog post by DeFiance Capital Founder and CEO Arthur Cheong on Tuesday, the High Court of Singapore has delivered a favorable ruling for the firm, endorsing its preference for jurisdiction in Singapore, rather than the British Virgin Islands, which had been advocated by 3AC.The tussle between 3AC and DeFiance Capital centers around the ownership of certain assets. The liquidators appointed by the British Virgin Islands Court, from Teneo, assert that these assets essentially belong to 3AC’s creditors. However, DeFiance Capital argues vehemently that these assets must be partitioned and returned to its stakeholders.Struggle over assets and jurisdictionAt the heart of the matter are assets totaling $115 million, encompassing digital currencies and non-fungible tokens (NFTs), which currently remain under the control of DeFiance Capital. Additionally, there are 69 SAFE (simple agreement for future equity)/SAFT (simple agreement for future tokens) agreements linked to 3AC. Although Teneo places the collective worth of these assets at roughly $141 million, DeFiance Capital’s estimation is more conservative, pegging it at around $120 million.Beyond asset ownership, jurisdiction has become a pivotal point of contention in the legal discourse. DeFiance Capital has steadfastly advocated for legal proceedings to take place in Singapore, where it operates, as opposed to the British Virgin Islands. The recent ruling from the High Court of Singapore lends support to this stance, challenging Teneo’s argument.DeFiance articulated its position, asserting: “Our position was that all the important witnesses and documents are in Singapore and the dispute ought to be heard by the Singapore Courts to ensure all relevant evidence would be available.”With the court’s decision aligning with DeFiance’s jurisdictional preference, the firm hopes that this development will pave the way for more substantive engagement between the parties, rather than being embroiled in procedural wrangling. The firm believes that this will allow the focus to shift towards addressing the core issues at hand.Business riftThe genesis of this legal saga dates back to 2020 when DeFiance was established as part of the 3AC group, operating autonomously under the stewardship of its founder, Arthur Cheong. The rift escalated in February 2022, when Cheong declined 3AC’s proposal to relocate to Dubai, eventually leading to the formation of two Singapore-based firms in May of that year.Furthermore, in the same month, DeFiance extended a loan of $35 million worth of USDC to 3AC, effectively becoming a creditor. Complications arose when 3AC’s founders transferred legal rights related to DeFiance Capital, a transaction that remained incomplete as 3AC filed for bankruptcy.In light of the ongoing dispute, 3AC asserted that DeFiance’s assets should be harnessed to settle its debts. However, DeFiance firmly stood its ground, upholding its ownership claims over the assets.With liquidators advocating for resolution in the British Virgin Islands — a move that DeFiance rejected due to its Singaporean management ties with 3AC — the stage was set for the legal clash that has now taken a notable turn with this recent court ruling.

Legal Process Continues Following Crypto.com Transfer MishapJatinder Singh, a customer of Singapore-headquartered Crypto.com is expected to face a plea trial next month in the wake of an errant transfer that occurred on the platform over two years ago.In 2021, Crypto.com inadvertently transferred over $10 million into Thevamanogari Manivel’s Commonwealth Bank account in Australia. Remarkably, this substantial error went unnoticed by Crypto.com for seven months until it was uncovered during an audit.Photo by Tingey Injury Law Firm on Unsplash18-month sentenceManivel, a 41-year-old disability support worker, was arrested at Melbourne airport while attempting to board a plane to Malaysia in March 2022. She was holding a one-way ticket and nearly $11,000 in cash. Her recent sentencing, following her guilty plea for recklessly dealing with the proceeds of the crime, has garnered significant attention.The court imposed an 18-month community corrections order, including six months of intensive compliance and unpaid community work. This punishment was in addition to the 209 days Manivel had already spent in custody.Embarrassing errorCrypto.com’s multimillion-dollar mistake made headlines globally when it came to light during legal proceedings aimed at freezing Manivel’s assets. This incident occurred during a period of heightened uncertainty in the cryptocurrency market, mere months before the highly publicized collapse of rival FTX.In 2018, Manivel met Jatinder Singh, who became her partner and shared her interest in cryptocurrency investments. Singh attempted to make a payment using Manivel’s bank account on Crypto.com but encountered a rejection due to a name mismatch. A processing error, however, led to a massive transfer of $10.47 million into Manivel’s account.Realizing the overpayment, Singh advised Manivel to move the funds to a joint Westpac account. Between the transfer and Manivel’s arrest, the money was used to purchase four houses, vehicles, art, and furniture, and $4 million was sent to an overseas account.Crypto.com discovered the error during an audit in December 2021 and initiated efforts to reclaim the funds from Commonwealth Bank. In January 2022, the bank contacted Manivel multiple times, seeking the return of the money. Manivel, initially regarding these communications as scam attempts, remained unaware of the gravity of the situation. She later informed the police that Singh had claimed to win the money in a Crypto.com competition.Theft chargesWith Manivel having been dealt with by the courts, attention now turns to Singh, who faces charges of theft and is scheduled for a plea hearing on October 23.In response to this incident, Crypto.com highlighted its commitment to enhancing internal processes to ensure security and compliance in financial services. This includes updates to their refund and withdrawal systems to prevent such occurrences in the future.The wayward transfer may have left Crypto.com with egg on its face, but the firm has been redeeming itself via other endeavors, including the roll-out of the use of AI on its platform. On the regulatory front, the company has been working diligently towards compliance in the Spanish market, having already acquired trading licenses in Dubai and its home market of Singapore.This case serves as a cautionary tale of the unexpected consequences that can arise in crypto. Such elementary mistakes will not provide confidence to service users. The saga lays down a marker for a need for greater professionalism in the sector.