In a dramatic turn of events, the co-founders of Three Arrows Capital (3AC), once a powerhouse in the crypto hedge fund space, are now embroiled in a legal battle with the British Virgin Islands court, which has ordered a freeze on over $1.14 billion. Su Zhu, Kyle Davies and Davies’ wife Kelly Chen are grappling with allegations that they worsened the fund’s financial collapse following 3AC’s 2022 collapse.
Assets of 3AC founders will be frozen
Following the collapse of 3AC in 2022, the British Virgin Islands court ordered the freezing of assets belonging to Su Zhu, Kyle Davies and Kelly Chen. Teneo, the firm overseeing the closure, claimed the founders played a role in 3AC’s financial deterioration, justifying the blanket order banning the transfer or sale of assets totaling a staggering $1.14 billion.
Once a leading force in the crypto hedge fund landscape, Three Arrows Capital has faced decline in 2022. The fund, headquartered in Singapore, succumbed to a combination of ill-fated investments and the broader market crash triggered by the collapse of Terra LUNA. Unable to meet security calls from lenders, 3AC filed for bankruptcy in the British Virgin Islands.
Blame from Teneo to the founders
Teneo, which oversaw the closure, accuses founders Zhu and Davies of failing to cooperate and complicating the liquidation. The debt to creditors is estimated at approximately $3.3 billion. This freezing order is not an isolated incident; Singaporean authorities had previously imposed a local freezing order, which led to Su Zhu’s arrest in September.
Now, according to a recent report from Bloomberg, $1 billion in assets belonging to the founders of crypto hedge fund Three Arrows Capital (3AC) have been frozen by a court in the British Virgin Islands. Teneo, the company managing 3AC’s closing, confirmed the news. Co-founders Su Zhu, Kyle Davies, and Davies’ wife, Kelly Chen, will not have the means or access to move assets worth more than $1 billion.
The fund that collapsed with Terra has $3.3 billion in debt
3AC owes about $3.3 billion to creditors, Teneo estimates. They claimed that these founders contributed to worsening 3AC’s financial problems, which was one of the reasons why the court froze its assets. The fallout from the Three Arrows Capital saga continues to reverberate across the industry as regulators and legal authorities intensify their focus on crypto assets. Global freezing orders, arrests and regulatory bans highlight the difficulties faced by once-famous figures in the crypto world, Su Zhu and Kyle Davies, as they deal with a tarnished reputation and legal battles on multiple fronts.
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