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Three Arrows Capital Founders Face Asset Freeze Amidst Crypto Hedge Fund Collapse

Unraveling the Crypto Hedge Fund Saga: Frozen Assets and Legal Turmoil at Three Arrows Capital.

by Alexander
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A British Virgin Islands court has frozen approximately $1 billion in assets belonging to the co-founders of Three Arrows Capital, Su Zhu and Kyle Davies, along with Davies’ wife, Kelly Chen. The move comes as part of the ongoing liquidation process, with estimated creditor claims amounting to around $3.3 billion.

Hedge Fund’s Downfall and Legal Actions

Once a major player in the crypto hedge fund space, Three Arrows Capital faced a dramatic collapse in 2022 due to leveraged bets gone awry. The liquidators, Teneo, secured a worldwide freezing order, alleging that the founders should be held responsible for the fund’s substantial losses.

Singapore Legal Actions and Arrest

The legal woes extend beyond the British Virgin Islands, as a Singapore court issued a domestic freezing order. Furthermore, Su Zhu, one of the co-founders, faced arrest at Singapore’s Changi Airport in September. Singapore has banned Zhu and Davies from engaging in any regulated activity in the country.

Lack of Cooperation and Bankruptcy Filing

Operating out of Singapore previously, Three Arrows Capital filed for bankruptcy in the British Virgin Islands. Teneo, appointed as the liquidator by the British Virgin Islands court, has accused the founders of a lack of meaningful cooperation in the liquidation process.

Su Zhu and Kyle Davies, once celebrated figures during the cryptocurrency bull run, have seen their reputations tarnished amid revelations of risky financial practices. This development follows a broader trend in the industry, with Sam Bankman-Fried, the founder of FTX Trading Ltd., recently convicted of fraud after a month-long trial.

The freezing of Three Arrows Capital founders’ assets underscores the legal fallout from the hedge fund’s collapse, contributing to the ongoing scrutiny of risk management practices within the cryptocurrency sector.

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