Cheong Jun Yoong v Three Arrows Capital Ltd: Cryptoassets, Trust Law, and Forum Conveniens

In *Cheong Jun Yoong v Three Arrows Capital Ltd*, the Singapore High Court addressed an application by the defendants, Three Arrows Capital Ltd and its liquidators, to set aside an order allowing the claimant, Cheong Jun Yoong, to serve an Originating Claim out of Singapore. Cheong claimed that Three Arrows Capital Ltd held cryptoassets under trust for him and other investors. The court considered whether Singapore was the appropriate forum, addressing the location of cryptoassets and the substance of the trust claim. The High Court dismissed the defendants' application, finding that Singapore had sufficient nexus to the case, was the more appropriate forum, and that there was a serious question to be tried.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

Defendants' application dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court considers the situs of cryptoassets and forum conveniens in a trust claim against Three Arrows Capital Ltd, dismissing the application to set aside service out of jurisdiction.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Three Arrows Capital LtdDefendantCorporationApplication to set aside ORC 2117 dismissedLost
Cheong Jun YoongClaimantIndividualApplication to set aside ORC 2117 dismissedWon
Christopher Farmer (in his capacity as a duly appointed liquidator of Three Arrows Capital Ltd)DefendantIndividualApplication to set aside ORC 2117 dismissedLost
Russell Crumpler (in his capacity as a duly appointed liquidator of Three Arrows Capital Ltd)DefendantIndividualApplication to set aside ORC 2117 dismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Chua Lee MingJudge of the High CourtYes

4. Counsels

Counsel NameOrganization
T AbiramiWongPartnership LLP
Daniel Liu Zhao XiangWongPartnership LLP
Kwong Kai ShengWongPartnership LLP
Lionel Leo Zhen WeiWongPartnership LLP
Claire Neoh Kai XinDrew & Napier LLC
Blossom Hing Shan ShanDrew & Napier LLC
Joshua Chin Tian HuiDrew & Napier LLC

4. Facts

  1. Cheong Jun Yoong managed a portfolio of assets in Three Arrows Capital Ltd.
  2. Cheong claimed the portfolio constituted a standalone fund, "DeFiance Capital" (DC Fund).
  3. Cheong claimed the assets in the DC Fund (DC Assets) were held on trust by the Company.
  4. The Company created sub-accounts for the claimant within the Company’s main accounts on two cryptocurrency exchanges, Binance and FTX.
  5. The claimant and the DC Investors subscribed for Class Defiance Shares in TAF Ltd and Class Defiance Interests in TAF LP.
  6. The claimant had sole discretion and control over the management of the DC Fund.
  7. In February 2022, SZ and KD told the claimant that they intended to relocate the 3AC Group’s operations to Dubai.

5. Formal Citations

  1. Cheong Jun Yoong v Three Arrows Capital Ltd and others, Originating Claim No 231 of 2023 (Summons No 2078 of 2023), [2024] SGHC 21

6. Timeline

DateEvent
Three Arrows Capital Ltd incorporated in the British Virgin Islands.
Cheong Jun Yoong began investing in cryptocurrency-related investments.
Cheong Jun Yoong managed about US$900,000 worth of investments and wanted to formally set up a fund.
ThreeAC Ltd took over as the Company’s investment manager.
SZ and KD told the claimant that they intended to relocate the 3AC Group’s operations to Dubai.
DeFiance Ventures Pte Ltd incorporated.
DeFiance Capital Pte Ltd incorporated.
The Company transferred all its rights and interests in the DC FB Workspace, and all the DC Assets that were in the DC Sub-Accounts, to DCPL.
A BVI court placed the Company under liquidation.
The Liquidators filed HC/OA 317/2022.
The High Court made orders recognizing the BVI Liquidation Proceedings as a “foreign main proceeding” in Singapore.
The claimant filed an application in OA 317 seeking permission to commence proceedings against the Company in connection with the DC Assets.
The Liquidators filed an application in the BVI Liquidation Proceedings seeking orders that the DC Assets were assets of and beneficially owned by the Company.
The High Court granted the claimant leave to commence action against the Company in connection with the DC Assets.
TAF Ltd was placed into voluntary liquidation in BVI by its sole member, TACPL.
The claimant filed an application to set aside the BVI court order granting the Liquidators permission to serve the Parallel BVI Proceedings on the claimant in Singapore.
The claimant filed this Originating Claim.
The court gave its approval for the claimant to effect service of the Originating Claim on the defendants in the BVI.
Service was effected on the defendants.
Service was effected on the defendants.
DCPL novated the DC FB Workspace to DVPL.
The defendants filed the present application to set aside ORC 2117 and the service of the Court Papers on the defendants.
Hearing date.
Judgment date.

7. Legal Issues

  1. Service out of jurisdiction
    • Outcome: The court found that the claimant had demonstrated sufficient nexus to Singapore, that Singapore was the more appropriate forum, and that there was a serious question to be tried. The court also found that there had been no failure to make full and frank disclosure.
    • Category: Procedural
    • Sub-Issues:
      • Sufficient nexus to Singapore
      • Singapore as forum conveniens
      • Serious question to be tried
      • Full and frank disclosure
  2. Situs of cryptoassets
    • Outcome: The court held that the location of a cryptoasset is best determined by looking at where it is controlled, and that the residence of the person who controls the private key should be treated as the situs of the cryptoasset linked to that private key.
    • Category: Substantive
    • Sub-Issues:
      • Control of private key
      • Residence of owner
      • Chose in action
  3. Existence of trust
    • Outcome: The court found that there was a serious question to be tried as to the existence of the trust, based on the claimant's discussions with SZ and KD, the segregation of the DC Assets, and the extent to which the claimant had control over these assets to the exclusion of the 3AC Group.
    • Category: Substantive
    • Sub-Issues:
      • Independent Fund Arrangement
      • Segregation of assets
      • Control over assets

8. Remedies Sought

  1. Declaration of Trust
  2. Account of Profits

9. Cause of Actions

  • Breach of Trust

10. Practice Areas

  • Commercial Litigation
  • Cross-Border Litigation
  • Insolvency Litigation
  • Trust Litigation
  • Cryptocurrency

11. Industries

  • Finance
  • Investment Management

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Oro Negro Drilling Pte Ltd and others v Integradora de Servicios Petroleros Oro Negro SAPI de CV and others and another appeal (Jesus Angel Guerra Mendez, non-party)Singapore Court of AppealYes[2020] 1 SLR 226SingaporeCited for the principle that the question of whether Singapore is the more appropriate forum only arises if there is at least another available forum and for the requirements to show that Singapore is the appropriate court to hear the action.
Zoom Communications Ltd v Broadcast Solutions Pte LtdSingapore Court of AppealYes[2014] 4 SLR 500SingaporeCited for the principle that where a defendant applies to set aside an order for service out of jurisdiction, the burden remains on the plaintiff to demonstrate that the requirements are satisfied and for the requirement of full and frank disclosure.
MAN Diesel & Turbo SE and another v IM Skaugen SE and anotherSingapore Court of AppealYes[2020] 1 SLR 327SingaporeCited for the position under the ROC 2021 largely reflects that under the Rules of Court 2014 and for the principle that the court is primarily concerned with the quality, rather than the quantity, of the connecting factors.
Kuswandi Sudarga v Sutatno SudargaSingapore High CourtYes[2022] SGHC 299SingaporeCited for the principle that it is not sufficient for the claimant to show that Singapore is one of the multiple forums which are comparatively equal; Singapore must be shown to be the more appropriate forum.
Wishing Star Ltd v Jurong Town CorpSingapore High CourtYes[2004] 1 SLR(R) 1SingaporeCited for the principle that the residency of a company is where the central management and command or control of the company is exercised.
Lim Chee Twang v Chan Shuk Kuen Helina and othersSingapore High CourtYes[2010] 2 SLR 209SingaporeCited for the principle that the residency of a company is where the central management and command or control of the company is exercised.
Chellaram and another v Chellaram and others (No 2)English High CourtYes[2002] 3 All ER 17England and WalesCited for the principle that the condition that the “trusts ought to be executed according to English law” must be fulfilled when permission to serve out is sought.
Tulip Trading Ltd (a Seychelles company) v Van Der Laan and othersEnglish High CourtYes[2022] 2 All ER (Comm) 624England and WalesCited for the principle that there was a good arguable case that the claimant was resident in the jurisdiction and that the digital assets were located in the jurisdiction.
Tulip Trading Ltd (a Seychelles company) v Bitcoin Association for BSV and othersEngland and Wales Court of AppealYes[2023] 2 All ER (Comm) 479England and WalesCited to note that there was no dispute in the appeal that there was a good arguable case that the claimant was resident in the jurisdiction and that the property was located in the jurisdiction.
Lavinia Deborah Osbourne v Persons Unknown and anotherEnglish High CourtYes[2022] EWHC 1021 (Comm)England and WalesCited for the principle that cryptoassets are to be treated as located at the place where the owner is domiciled.
Lavinia Deborah Osbourne v Person Unknown Category A and othersEnglish High CourtYes[2023] EWHC 39 (KB)England and WalesCited for the principle that there was a good arguable case that two NFTs were located in the jurisdiction when they were in wallets linked to the claimant’s account with a cryptoasset management platform.
Bybit Fintech Ltd v Ho Kai Xin and othersSingapore High CourtYes[2023] SGHC 199SingaporeCited for the principle that USDT were choses in action and that cryptoassets constitute property, the proprietary rights to which may be enforced in court.
CLM v CLN and othersSingapore High CourtYes[2022] 5 SLR 273SingaporeCited for the principle that cryptoassets constitute property, the proprietary rights to which may be enforced in court.
Karaha Bodas Co LLC v Pertamina Energy Trading Ltd and anotherSingapore Court of AppealYes[2005] 2 SLR(R) 568SingaporeCited for the principle that as the claim was a trust claim, the cause of action arose where in substance the trust in favour of the claimant arose.
Rickshaw Investments Ltd and another v Nicolai Baron von UexkullSingapore Court of AppealYes[2007] 1 SLR(R) 377SingaporeCited for the principle that the compellability of witnesses to give evidence in the BVI was a significant factor since the main disputes revolve around questions of fact.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Rules of Court 2021Singapore
Insolvency, Restructuring and Dissolution Act 2018Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Cryptoassets
  • DeFiance Capital (DC) Fund
  • Three Arrows Capital Ltd
  • Service out of jurisdiction
  • Forum conveniens
  • Trust
  • Private Key
  • Situs
  • Independent Fund Arrangement
  • Master-Feeder Fund Structure

15.2 Keywords

  • cryptoassets
  • trust
  • service out of jurisdiction
  • forum conveniens
  • Three Arrows Capital
  • DeFiance Capital

17. Areas of Law

Area NameRelevance Score
Jurisdiction85
Cryptoassets75
Civil Procedure70
Conflict of Laws65
Trust Law60
Bankruptcy40
Foreign Law30
International Arbitration30
Company Law30
Banking and Finance20

16. Subjects

  • Conflict of Laws
  • Civil Procedure
  • Trusts
  • Cryptocurrency
  • Insolvency