The founder of 3AC is in trouble and 1.14 billion in assets have been frozen. What will happen next?
The once-famous Singaporean cryptocurrency hedge fund Three Arrows Capital (3AC) has continued to go bankrupt. On December 21, 2023, according to Bloomberg, the British Virgin Islands Court issued an order to the assets in the name of its co-founders Su Zhu and Kyle Davies. A freezing order was issued.
Overwhelmed by huge debts, 3AC owes as much as $3.3 billion
The unexpected $1.14 billion freeze restricts Zhu and Davies from transferring or selling assets and is quite broad, also affecting the assets of Davies’ wife, Kelly Chen. Liquidator Teneo estimates that 3AC's creditors are owed a total of about $3.3 billion after it collapsed during the 2022 crypto bear market.
Teneo sought a global freezing order on behalf of the liquidation proceedings, alleging that the founders should not be held responsible for 3AC's deteriorating financial position. The freezing order is consistent with the assertion that Founder is liable for an amount equivalent to the value of the frozen assets. In addition, it is reported that the founder of 3AC is currently subject to a domestic freezing order from a Singaporean court.
Founded in 2012, Three Arrows Capital was once one of the world’s largest cryptocurrency hedge funds. However, during the 2022 crypto bear market, it failed to meet lenders’ margin calls, ultimately leading to a bankruptcy filing.
Related articles: MAS imposes 9-year ban on CEO and directors of Three Arrows Capital
Su Zhu arrested, Kyle Davies on the run
The co-founder's legal troubles escalated further when Su Zhu was arrested in Singapore in September 2023, after reportedly trying to flee the country after being sentenced to four months in prison by a local court. Meanwhile, Kyle Davies also faces a custodial order but remains at large.
To add insult to injury, Singapore's central bank banned two people, including Zhu and Davies, from engaging in regulated activities in Singapore for nine years.
The freeze order on their assets is the latest chapter in the ups and downs of Three Arrows Capital, once a star player in the cryptocurrency hedge fund world. The ongoing legal proceedings highlight the challenges faced by industry players during a time of market volatility and financial stress.
