A cryptocurrency hedge fund Three Arrows Capital filed for Chapter 15 bankruptcy in the Southern District of New York late Friday, after weeks of speculation that it was functionally bankrupt.
Chapter 15 applications are often subject to foreign jurisdiction. A court in the British Virgin Islands had previously ordered Three Arrows’ local branch to go into liquidation, suggesting Friday’s filing is likely related to that. The US-based firm Teneo Restructuring was commissioned to oversee the liquidations.
Three Arrows Capital Crash Affected Many Companies In The Cryptocurrency Market
The firm had borrowed large sums of funds from various crypto lending institutions, including BlockFi, Celsius, Babel Finance, and Voyager Digital, but was unable to make payments. These companies either stopped their withdrawals or needed an extension of their credit lines to weather the storm. Chapter11dockets.com first filed for bankruptcy, and Bloomberg reported it was a Chapter 15 filing.
According to Bloomberg, with the Chapter 15 filing, the company will be allowed to keep its US assets even while the British Virgin Islands assets are being liquidated.
The application, which states that “the borrower’s business collapsed following extreme volatility in the cryptocurrency markets,” noted Three Arrows’ intent to “continue its active efforts to seize assets and preserve the legal standing of individual creditors.”
The application also included the following statements:
“The borrower’s financial woes and transactions in the British Virgin Islands have been widely reported and the outcome of these transactions has implications for the global digital asset markets.”
Three Arrows Capital has not yet made a statement on the subject.
*Not investment advice.