Key takeaways:
- A British Virgin Islands court has issued a freezing order on approximately $1 billion in assets belonging to the founders of Three Arrows Capital.
- In a recent Singapore court session, Su Zhu, co-founder of 3AC, underwent questioning regarding the crypto fund’s demise and efforts to recover assets.
In a recent development, a British Virgin Islands court has issued a freezing order on approximately $1 billion worth of assets belonging to the founders of Three Arrows Capital (3AC), a cryptocurrency hedge fund that faced a significant collapse in 2022 due to a series of unsuccessful investments.
The court’s directive specifically restrains co-founders Su Zhu and Kyle Davies, along with Davies’ wife Kelly Chen, from transferring or selling assets valued up to $1.14 billion. Creditors, owed an estimated $3.3 billion, are closely monitoring these legal proceedings.
The freezing order has been implemented to prevent the three individuals from dealing with their assets, signaling legal obligations and risks to counterparts and affiliates of Three Arrows’ founders.
The global freezing order aligns with claims by liquidators, Teneo, alleging that the founders should be held accountable for causing a deterioration in 3AC’s position equivalent to the value specified in the freezing orders.
Teneo also highlighted that a Singapore court issued a domestic freezing order in tandem with the BVI court decision.
The move follows the arrest of Su Zhu at Singapore’s Changi airport in September and subsequent questioning in a Singapore court. Teneo is actively pursuing the recovery of $3.5 billion for creditors, emphasizing the international nature of the legal actions against the founders.
Notably, the founders are already subject to a domestic freezing order from the Singapore Court.
This legal development underscores the increasing global consensus on the necessity for rigorous regulation and oversight in the cryptocurrency sector, particularly in the wake of high-profile failures and allegations of risky practices.
As liquidators seek to recover $1.3 billion from Zhu and Davies, the far-reaching impact of Three Arrows Capital’s downfall becomes evident, reflecting broader concerns within the cryptocurrency investment landscape.
Singapore’s monetary authority has imposed a ban on Su Zhu and Kyle Davies, prohibiting them from engaging in regulated investment activities within the country for a duration of nine years each.
Appointed by a British Virgin Islands court, the liquidator is tasked with overseeing the bankruptcy proceedings of Three Arrows. Their primary objective is to recover the assets of the cryptocurrency hedge fund and ensure returns to its creditors following the company’s failure.
