Three Arrows Capital Scandal: $1 Billion “Frozen” by Court

The insolvency of the crypto hedge fund Three Arrows Capital (3AC) continues to spread. A court has now frozen $1.1 billion from founders Su Zhu and Kyle Davies and his wife to protect creditors.

When Three Arrows Capital (3AC) had to file for bankruptcy in July 2022, it quickly became clear: a serious scandal in the crypto industry was taking place here; $3.5 billion in liabilities had accumulated. Right from the start, the focus was on the founders of Three Arrows Capital, Su Zhu and Kyle Davies, who generously granted themselves loans and at the same time apparently ignored risk management as managing directors of 3AC.

The court-appointed insolvency administrator Teneo saw Su Zhu and Kyle Davies as personally responsible from the start and obtained arrest warrants.

Teneo now reports that a court in the British Virgin Islands has ordered the “freezing” of around $1.1 billion in crypto belonging to Su Zhu, Kyle Davies and his wife. The financial news agency Bloomberg reports on this, among others. According to Teneo, the court wants to prevent the Three Arrows Capital founders and families from trying to avoid their financial contribution in the insolvency proceedings with the order, which is valid worldwide.

This may be good news for creditors. Because Three Arrows Capital got into financial trouble because of the collapse of Terra (LUNA) and during an early inventory it seemed as if there wasn’t much left to be gained from 3AC. The claims totaling $3.5 billion also come from other crypto companies such as BlockFi, BitMEX, FTX, Genesis, Celsius and Voyager, some of which represent their customers. So $1.1 billion is a glimmer of hope.

By the way, Su Zhu was arrested in Singapore in September and sentenced to four months in prison. Kyle Davies is on the run. The founders of Three Arrows Capital and Davies’ wife could now also face personal bankruptcy.

Read more about the insolvency of Three Arrows Capital and find the latest financial news of the day with our companion app Born2Invest.

Conclusion: Legal analysis of the Three Arrow Capital scandal

Whether FTX, Terra or Three Arrows – the founders were always deeply involved in the financial collapses of the crypto year 2022. The bankruptcy proceedings and prosecution of figures like Sam Bankman-Fried, Su Zhu and Kyle Davies are taking longer than victims might wish. But they happen and, like now, produce results. The crypto scene is no longer a lawless space and cynics are already placing bets on who among the crypto celebrities will get caught next.

__

(Featured image by kalhh via Pixabay)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

First published in BLOCK-BUILDERS.DE. A third-party contributor translated and adapted the articles from the originals. In case of discrepancy, the originals will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us