3AC Liquidators Can Recover About $1.2 Billion From DCG And BlockFi

Key Points:

• According to a confidential report, Three Arrows Capital (3AC) liquidator Teneo indicates the potential to recover $1.2 billion from DCG and BlockFi.
• The settlement includes more than $1 billion in “potential claims” against DCG and its lending subsidiary Genesis and BlockFi for $220 million.
• Preference claims would come into play if the hedge fund was aware it was making payments that put one or more debts into a better position than other debts.

According to CoinDesk, Teneo, the liquidator of Three Arrows Capital (3AC), could attempt to recover around $1.2 billion from DCG and BlockFi.

A confidential July 7 report from Teneo, the liquidation firm, which CoinDesk reviewed, says failed crypto hedge fund Three Arrows Capital has a “potential claim” worth more than $1 billion with DCG and its lending subsidiary Genesis. The report also states that BlockFi has received a “preferred payment” of more than $220 million from 3AC.

Preference claims would come into play if the hedge fund were aware it made payments that put one or more debts into a better position than other debts. In this case, they concern transactions made by 3AC during what’s known as the insolvency twilight zone following the collapse of the Terra Luna project earlier in 2022.

However, with the current situation, the companies involved are all struggling and caught up in a tangle of lawsuits and complaints with different partners.

DCG and Genesis, along with founder Barry Silbert, are both embroiled in a lawsuit filed yesterday by Gemini CEO Cameron Winklevoss alleging a conspiracy to defraud Genesis creditors following claims of more than $600 million by the company. Gemini stagnates and shows no sign of being met.

In addition, BlockFi also filed a complaint requesting the recovery of more than $1 billion from FTX/Alameda. However, based on the filing filed by FTX, FTX does not accept BlockFi’s argument and argues that BlockFi is abusing bankruptcy rules. Accordingly, its bankruptcy plan was also opposed.

For now, Teneo declined to comment on any payback plans. DCG and BlockFi did not return requests for comment.

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