DeFiance Capital stated that none of its assets under management were raised by the bankrupt crypto hedge fund, its founders, or any of its affiliates. The company said it had been “materially affected” and “prejudiced” by the recent turn of events.
In a recent statement, the venture capital fund elucidated that its founder Arthur Cheong has had no access to and “consequently no visibility on 3AC’s financial statement and/or financial condition.”
DeFiance Capital also said Cheong created the firm “entirely separate” from Three Arrows in 2020, eight years after the hedge fund was founded by Kyle Davies and Zhu Su.
Earlier reports emerged that the web3-focused venture capital firm was incubated by Three Arrows and that the two firms had jointly co-invested in several deals, including stakes in dYdX as well as Solana-based smart contract specialist Orca.
In fact, DeFiance Capital’s website once read “operates as a sub-fund and share class of Three Arrows Capital.”
Cheong had posted a cryptic tweet, which read,
“Some friendships are truly priceless and a blessing. Some are not.”
Rumors started circulating about DeFiance’s potentially facing insolvency. But the founder said that the firm was “not done” and was working towards finding a solution without revealing any other details.
Following Three Arrows Capital’s bankruptcy proceedings, their relationship reportedly turned sour.
Distancing itself, the developers of dYdX also clarified that they were not exposed to 3AC contagion.