On July 1, Three Arrows Capital filed for bankruptcy in New York, causing significant losses for the various other crypto companies. Genesis Trading reported hundreds of millions in losses and Voyager Digital filed for bankruptcy after the fund defaulted on $670 million of loans.
Singapore-based crypto hedge fund Three Arrows Capital’s liquidators recently got approval from the Singapore High Court to investigate and liquidate the hedge fund’s assets.
Liquidation Request Approved
Earlier, British Virgin Islands court-appointed liquidator Teneo had filed a petition in Singapore’s High Court to liquidate Three Arrows Capital’s assets. As reported on August 24, the court granted Teneo’s plea to secure and liquidate hedge funds’ assets in Singapore. This means that the court now legally recognizes the liquidation order originally filed in the British Virgin Islands.
Teneo is now investigating the liquidation process of Three Arrows Capital and securing its global assets. The court’s approval allows Teneo the ability to secure all financial records, including bank accounts, cryptocurrencies, NFTs, stakes in companies, and properties.
Given the recent court orders, Three Arrows’ founders Su Zhu and Kyle Davies would not be able to sell their assets in Singapore anymore. Previously in July, Su Zhu had tried to sell one of his homes in Singapore for $35 million. Notably, Three Arrows’ co-founder Su Zhu owns two luxury residential spaces in Singapore.
Teneo had gained control of almost $40 million of Three Arrows Capital’s assets until now. A court filing by the creditors revealed that they owned more than $2.8 billion in unsecured claims. The creditors comprise crypto-asset broker Voyager Digital LLC and crypto-focused venture capital firm Digital Currency Group.
A spokesperson of the Singapore High Court refused to comment on the Three Arrows Capital court case by saying: “We are unable to comment on cases that are before the Courts.”
Terra Crash Behind 3AC’s Downfall
The Terra-LUNA crash disaster led many crypto firms including Celsius and Voyager Digital to file for bankruptcy. This also compelled several crypto firms to stop withdrawals, putting crypto investors into FUD.
The crypto market crashed and eventually the top cryptocurrencies- Bitcoin and Ethereum- fell below $20,000 and $1000, respectively. The total crypto market cap slumped from $2 trillion to below $1 trillion.
To add to this, Three Arrows Capital’s founders Su Zhu and Kyle Davies failed to cooperate with courts and liquidators. This eventually led to the liquidator’s action.
Bankruptcy Filing
Earlier, Three Arrows Capital had filed for Chapter 15 bankruptcy in the Southern District of New York federal court after weeks of speculation about the company’s solvency.
Chapter 15 filings are commonly related to foreign proceedings. A court in the British Virgin Islands previously had ordered Three Arrows’ local branch to enter into liquidation, indicating that the filing for bankruptcy may be linked to this. US-based firm Teneo Restructuring had been brought in to administer the liquidations.
Three Arrows Capital had borrowed huge amounts of funds from several crypto lenders like BlockFi, Celsius, Babel Finance, and Voyager Digital, but was unable to pay them back. Eventually, the lenders halted withdrawals or needed credit lines extended to weather the storm.
