30 Sep 2022

Arthur Cheong’s DeFiance Capital raising $100 million to invest in liquid tokens

Arthur Cheong’s DeFiance Capital raising $100 million to invest in liquid tokens

DeFiance Capital, the crypto venture capital firm that recently distanced itself from bankrupt crypto hedge fund Three Arrows Capital (3AC), is in the process of raising a $100 million fund to invest in liquid tokens, three sources with direct knowledge of the matter told The Block.

The fund is called "Liquid Venture Fund," one of the sources said, adding that almost half of the targeted fundraise has been completed.

While the target raise is $100 million, the fund can get started with investing with less, two of the three sources confirmed. DeFiance Capital has received some commitments from one crypto fund of funds and a few family offices.

DeFiance Capital was founded in 2020 by Arthur Cheong, and the firm once described itself as a “sub-fund and share class of Three Arrows Capital.” After 3AC got into financial trouble in June, DeFiance Capital said in July that it is a separate firm from 3AC and operates independently.

3AC had grown into one of the crypto industry's biggest hedge funds, before May's collapse of the Terra ecosystem left it facing significant losses. In June, a court in the British Virgin Islands appointed financial advisory firm Teneo to handle 3AC's liquidation. 3AC later filed for Chapter 15 bankruptcy in New York.

DeFiance Capital recently said it had been "materially affected" and "prejudiced" by the liquidation of 3AC.

DeFiance's new fundraising effort comes as more venture capital giants are looking to invest in liquid tokens. Earlier this year, Sequoia Capital launched a $500 million-$600 million crypto fund to primarily invest in "liquid tokens" — tokens that are already listed on crypto exchanges and those that are yet to be listed — Shaun Maguire, partner at Sequoia Capital, told The Block at the time.

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