The Algorand Foundation’s efforts to recoup $53.5 million worth of USDC from bankrupt crypto hedge fund Three Arrows Capital (3AC) have been stalled by a Singapore judge.
Algorand sought damages from 3AC for violating a lockup agreement from an OTC trade dating back to September 2021.
….The Algorand Foundation never provided 3AC with unsecured loans or a line of credit. See our Transparency Report https://t.co/ZkxQkgd5Aj
— Algorand Foundation (@AlgoFoundation) July 18, 2022
The entity behind the Algorand blockchain filed a winding up application in the Singapore High Court in an effort to recover these funds. A winding up application can be filed by a creditor of a company that is presumed to be insolvent.
In a hearing at the country’s High Court last month, reported by Singapore Law Watch, Justice Vinodh Coomaraswamy rejected Algorand’s claim on the grounds that cryptocurrency cannot be considered money.
“I mean, what if you had a (community) in the world that used seashells as its internal medium of exchange? Would the Singapore courts have to recognise that as money,” said Coomaraswamy to Algorand’s attorney.
The judge dismissed the application, opining that debt of any sort must correspond to fiat currency and not an “intangible” asset like cryptocurrency.
The ruling could set a precedent for other crypto-related cases in the country, particularly with judgements being issued on the notion that cryptocurrencies have little to no official legal status.
The decision is also surprising given Singapore’s status as a relatively “crypto-friendly” economy. The government also set up a way for firms in the industry to be regulated through the Payment Services Act.
The Monetary Authority of Singapore (MAS), the country’s central bank, has also stated that the doors are open for crypto players looking to explore developments in value-adding cases.
“Innovation and regulation are not incapable of co-existing. We do not split the difference by being less stringent in our regulation or being less facilitative of innovation,” said MAS Managing Director Ravi Menon in a speech last August.