Three Arrows Capital Founders In Legal Battle Over $1.3 Billion In Funds

Bloomberg has reported that liquidators responsible for the bankrupt hedge fund Three Arrows Capital (3AC) seek to recover approximately $1.3 billion in funds from the fund’s co-founders, Su Zhu and Kyle Davies.

This news comes one year after a court in the British Virgin Islands ordered 3AC into liquidation.

Three Arrows Capital Founders Targeted

Three Arrows Capital was a crypto hedge fund founded in 2018 by Su Zhu and Kyle Davies. The firm reportedly managed over $2 billion in assets at the height of its operations.

Despite this, the firm appeared to run into trouble in mid-2021, with reports of significant losses in its portfolio.

In June 2022, a court in the British Virgin Islands ordered Three Arrows Capital into liquidation following an application by one of the firm’s creditors.

The liquidators appointed to oversee the winding-up of the firm are now seeking to recover as much value as possible for the creditors.

The liquidators’ claims against Zhu and Davies are based on allegations that the co-founders incurred debt when the firm was already insolvent between May and June 2022.

Furthermore, the liquidators argue that this debt is part of the $3 billion owed to Three Arrows’ creditors and that the losses incurred by the co-founders resulted from over-leveraging and failed investments in Luna tokens and other ventures.

According to a Bloomberg insider, the liquidators argued that the firm was already on the brink of insolvency during these investments. The liquidators are now initiating legal proceedings against Zhu and Davies in a court in the British Virgin Islands.

It’s difficult to predict the chances of Teneo, the liquidator behind Three Arrows Capital, recovering the full $1.3 billion from the founders of Three Arrows Capital as it depends on various factors such as the strength of the evidence and legal arguments presented in court, the willingness of the founders to cooperate and negotiate a settlement, and the assets available for liquidation.

However, it’s worth noting that liquidation procee

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Author: Ronaldo Marquez

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