BVI Court Freezes Over $1 Billion in Assets of 3AC Founders

A British Virgin Islands court has issued an order to freeze assets worth $1 billion belonging to the founders of Three Arrows Capital (3AC). This decision, disclosed by the crypto hedge fund’s assigned liquidator Teneo Restructuring, marks a crucial development in the ongoing saga surrounding the troubled cryptocurrency investment firm.

Court Freezes Assets of Three Arrows Capital Founders Amid Investigation

A court in the British Virgin Islands has taken decisive action against the founders of Three Arrows Capital (3AC) by freezing their assets, as revealed by the hedge fund’s liquidator, Teneo Restructuring. 

The court’s global freezing order specifically targets co-founders Su Zhu and Kyle Davies, along with Kelly Chen, Davies wife, barring them from transferring or selling assets up to a value of $1.14 billion. This move is part of an effort to hold them accountable for the alleged financial mismanagement that contributed to 3AC’s downfall.

Teneo’s statement elaborated on the allegations, stating that the founders are being pursued for actions that significantly worsened 3AC’s financial situation. Zhu, who was arrested in September for not complying with a court mandate to disclose his management activities at 3AC, was incarcerated in Singapore but is expected to be released soon due to reported good behavior.

3AC’s 2022 Historic Downfall

The implosion of Three Arrows Capital (3AC) can be largely attributed to its overexposure to Do Kwon’s Terra-Luna, which led to monumental losses following the cryptocurrency’s collapse in May 2022.

The Singapore-based hedge fund, which had been operating for a decade, found itself in a precarious position as cryptocurrency exchanges began liquidating its assets. This action was taken after 3AC failed to meet margin calls amidst the market turmoil. Subsequently, the fund was ordered into liquidation in June 2022 and filed for Chapter 15 bankruptcy in the following month, marking a significant downturn in its fortunes.

Teneo Highlights 3AC’s $3.3 Billion Debt and Founders’ Non-Cooperation

In the wake of 3AC’s catastrophic collapse, Teneo Restructuring, the firm’s liquidator, has disclosed that the hedge fund owes its creditors approximately $3.3 billion. Further intensifying the legal repercussions for the fund’s co-founders, a Singapore court recently issued a domestic asset freeze order against Su Zhu and Kyle Davies.

Teneo described the process of engaging with Zhu and Davies as a lengthy and “intensive effort,” indicating significant challenges in securing their cooperation. Despite these efforts, Davies remains at large, even after receiving an imprisonment committal order.

Both Davies and Zhu have been hit with a nine-year ban in Singapore, prohibiting them from engaging in regulated activities or holding chief executive roles in any financial company, a significant setback given their previous positions in the financial sector.