Liquidators Move to Recover Funds for Creditors
The co-founders of the collapsed cryptocurrency hedge fund Three Arrows Capital (3AC) face further legal troubles after a British Virgin Islands court ordered the freezing of over $1 billion in their assets. Liquidators appointed to wind down 3AC’s operations are seeking to recover funds for the firm’s estimated $3.3 billion in liabilities.
3AC co-founders Su Zhu and Kyle Davies, along with Davies’ wife Kelly Chen, now have court-mandated restrictions on transferring or disposing of their assets valued at $1.14 billion. The order was obtained by Teneo, 3AC’s liquidator.
Teneo alleges that Zhu, Davies and Chen have not been fully cooperating with the liquidation process. Zhu was also recently arrested in Singapore for contempt of court and sentenced to four months in prison for failing to cooperate with local regulators investigating 3AC’s collapse.
The latest court order follows a similar domestic freezing order issued by a Singapore court. Zhu and Davies have also been banned from regulated activities in Singapore.
3AC’s rapid downfall in 2022 was caused by huge bets on cryptocurrencies and related investments that soured amid the broader market downturn. The hedge fund’s struggles occurred alongside other high-profile cryptocurrency crashes like Terra Network and FTX, roiling investor sentiment.
Liquidators are continuing efforts to recover billions for 3AC’s many creditors from Zhu, Davies and Chen’s personal assets. Zhu is expected to be released from prison this month, though any further non-compliance could potentially extend his sentence.
The freeze on Zhu, Davies and Chen’s assets shows liquidators and regulators continuing to seek accountability from those responsible for 3AC’s deteriorating financial position. As the complex legal proceedings unfold, creditors will be hoping for maximum possible recovery from the co-founders’ billions in personal wealth.