Assets of Three Arrows Capital Founders Frozen by Court
A British Virgin Islands court has frozen approximately $1 billion in assets owned by the founders of cryptocurrency hedge fund Three Arrows Capital (3AC), according to the firm’s liquidator. The court order prohibits co-founders Su Zhu and Kyle Davies, as well as Davies’ wife Kelly Chen, from transferring or selling assets valued at up to $1.14 billion. Creditors are estimated to be owed around $3.3 billion. 3AC, once a major crypto-native hedge fund, collapsed in 2022 after a series of unsuccessful investments.
“The worldwide freezing order has been sought in connection with claims that are being pursued by the liquidators that allege, among other things, that the founders should be held responsible for causing 3AC’s position to deteriorate by an amount that is equivalent to the value of the freezing orders sought.”
Teneo representatives
Accusations against Zhu and Davis
Zhu and Davis are accused of compelling 3AC to assume significant leverage between May and June 2022 after suffering heavy losses on ill-fated Luna tokens and other investments. The liquidators assert that the firm was already insolvent and are now suing Zhu and Davis in a British Virgin Islands court to recover these losses from the creditors. Previously, Teneo, designated as the liquidator by a British Virgin Islands court, criticized the founders for their lack of cooperation.
Legal Troubles and Future Plans
In September, Zhu was arrested while attempting to leave Singapore and subsequently sentenced to four months in jail. In December, he faced his first court questioning in Singapore regarding the collapse of the firm. Earlier in 2023, the 3AC founders revealed their intentions to raise $25 million for the launch of a new cryptocurrency exchange.
Hot Take: Three Arrows Capital Founders Face Asset Freeze and Legal Battle
The founders of cryptocurrency hedge fund Three Arrows Capital (3AC) are experiencing significant legal challenges, with a British Virgin Islands court freezing approximately $1 billion in assets. The court order prevents the founders from disposing of or transferring assets worth up to $1.14 billion. Allegations have been made against Su Zhu and Kyle Davies, accusing them of exacerbating 3AC’s financial decline through risky investments. The liquidators are pursuing legal action to recover losses from the creditors. These recent developments add to the founders’ existing legal troubles, including Zhu’s arrest and subsequent jail sentence. It remains to be seen how this ongoing legal battle will impact the future plans of the 3AC founders.
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