SINGAPORE Trends and Developments Contributed by: Jansen Chow and Ang Leong Hao, Rajah & Tann Singapore LLP
cryptocurrency assets held within the DC Fund were held on trust for him and his investors. As the defendant was a foreign corporation incorporated in the British Virgin Islands, the Singapore court had to be satisfied that it had jurisdiction over the defendant. On this issue, the claimant argued, amongst others, that the court had jurisdiction, as the cryptocurrency assets were located in Singapore. On this point, the claimant submitted that the location of cryptocurrency assets was to be determined by the residence of their owners. In contrast, the defendant argued that the location of cryptocur - rency assets should be determined by their own - ers’ domicile and/or that cryptocurrency assets were choses in action and their location was to be determined by where the right to redeem them could be enforced. The court agreed with the claimant’s argument. The court observed that while cryptocurrency assets constitute property, they have no physical identity, and their location cannot be determined by their physical presence. The court held that the “location of a cryptoasset is best determined by looking at where it is controlled” and control over a cryptocurrency asset is “with the person who controls the private key to the cryptoasset linked to that key” . Lastly, the location of the person who controls the private key should be determined according to the person’s residence rather than domicile. As such, given that the owners of the cryptocurrency assets were resi - dent in Singapore, the court was satisfied that there was sufficient nexus to Singapore. The decision in Three Arrows is significant as it provided guidance for determining the location of cryptocurrency assets based on control and residence. This is crucial for asset recovery as it
provided a framework for identifying the jurisdic - tion in which legal proceedings may be initiated. Valuation of cryptocurrency assets in the context of the court’s assessment of damages Traditionally, the compensatory principle in the context of breach of contract means that dam - ages would generally be assessed with reference to the date of breach. However, given the vola - tility of cryptocurrency assets, this general rule may not be suitable. For instance, the price of a cryptocurrency asset may well rise sharply after the date of breach. If damages were only to be assessed with reference to the date of breach, a claimant may not be justly compensated. In Fantom Foundation, the claimant, Fantom Foundation Ltd ( “Fantom Foundation” ), was a company incorporated in the Cayman Islands that operated the Fantom Opera Chain (a block - chain platform with its own native coin, FTM). The defendants were Multichain Foundation Ltd ( “Multichain” ) and Multichain Pte Ltd. The dispute arose from a massive security breach of Multichain’s platform that led to the loss of substantial cryptocurrency assets – including FTM, stablecoins and wrapped tokens – which Fantom Foundation had entrusted to Multichain under a set of agreements. Fantom Foundation obtained default judgment against Multichain, and the issue before the court was the assess - ment of damages for its two claims. The first claim involved a deposit of USD61,829.70 at Multichain’s platform pursuant to an agreement between the parties. Due to the security breach on 7 July 2023, Fantom Foun - dation suffered a loss of the deposit, and the residual value of the deposit was USD3209.12 on 18 September 2023 (the date of the filing of the claim). The court held that Fantom Founda -
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