Court Issues Worldwide Asset Freeze on Three Arrows Capital Co-Founders
In a significant development concerning the downfall of cryptocurrency hedge fund Three Arrows Capital (3AC), a court has issued a worldwide asset freeze worth $1.14 billion on the fund’s co-founders. The freeze aims to recover the fund’s assets and provide returns to its creditors. Co-founders Su Zhu and Kyle Davies, as well as Davies’ wife Kelly Chen, are affected by the freeze order.
Three Arrows Capital Faces Bankruptcy and Legal Proceedings
Last year, Three Arrows Capital filed for bankruptcy after experiencing substantial losses due to a sell-off in its invested assets during a cryptocurrency price drop. As a result, liquidators were appointed to oversee the bankruptcy proceedings.
Assets of Co-Founders Subject to Freeze Order
The court in the British Virgin Islands has issued an asset freeze order on the co-founders of Three Arrows Capital. This order prohibits Su Zhu, Kyle Davies, and Kelly Chen from dealing with their assets, including transferring or selling them, up to a total value of $1.144 billion. The freeze aims to safeguard the assets and emphasize legal obligations and associated risks.
Efforts to Recover Funds Expand
Kyle Davies’ wife, Kelly Chen, being included in the asset freeze order signifies an expansion of the liquidators’ efforts to recoup Three Arrows Capital’s assets. By extending the freeze to cover assets held by Davies’ spouse, the chances of recovering funds owed to creditors are enhanced.
$3.4 Billion in Claims Filed Against Three Arrows Capital Estate
Liquidators have faced challenges in retrieving Three Arrows Capital’s assets due to non-cooperation and lack of essential information from Su Zhu and Kyle Davies. However, progress has been made, with initial distributions to creditors expected in the first quarter of the following year. The estimated value of the fund’s assets stands at $1.16 billion, with claims worth $2.7 billion anticipated for distribution.
Resolution of Litigation and Complexities in Liquidation Process
Litigation against parties such as Digital Currency Group (DCG), Genesis, and BlockFi has contributed an estimated $292 million to the reported assets. However, the BlockFi settlement is still pending approval. A total of 154 claims, amounting to $3.4 billion, have been filed against Three Arrows Capital’s estate. Some claims were not admitted for distribution or rejected, while others remain in dispute, adding complexity to the liquidation process.
Hot Take: Court Freezes $1.14 Billion in Failed Crypto Fund’s Assets
In a significant move to recover funds for creditors, a court has issued a worldwide asset freeze on the co-founders of Three Arrows Capital. This freeze order affects assets worth $1.14 billion and emphasizes legal obligations and associated risks. The inclusion of Kyle Davies’ wife in the freeze extends efforts to recoup the fund’s assets. Despite challenges faced by liquidators, progress has been made in the liquidation process, with initial distributions planned for next year. However, complexities arise from rejected claims and ongoing disputes. This development underscores the consequences faced by cryptocurrency hedge funds and serves as a reminder of the risks involved in this volatile market.
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