Three Arrows Capital Files for Bankruptcy in the US – Here’s Why
Financially distressed crypto hedge fund Three Arrows Capital has filed for Chapter 15 bankruptcy in New York.
According to a Bloomberg report, the move will protect its assets in the U.S. while the liquidation takes place in the British Virgin Islands, where a court has given the green light to Teneo Restructuring to carry out the process.
Crypto hedge fund Three Arrows Capital has filed for Chapter 15 bankruptcy, a move that protects its US assets while a liquidation is carried out in the British Virgin Islands https://t.co/D2RoyB9LR6
— Bloomberg (@business) July 1, 2022
Three Arrows Capital was founded by longtime friends Su Zhu and Kyle Davis. Both studied at Columbia University before working briefly for Credit Suisse. They then founded Three Arrows Capital (3AC), which is estimated to manage up to $10 billion in cryptocurrency assets at its peak.
The crypto hedge fund went on to invest in well-known crypto projects – Avalanche, Aave, BlockFi, Deribit, Balancer, Polkadot, Solana, Terra, and Near are some of the more notable ones.
However, in early May, Three Arrows Capital began to experience financial difficulties due to the collapse of LUNA and UST.
In mid-June, Three Arrows Capital failed to execute some margin calls and eventually several of its Bitcoin and Ethereum trading positions were liquidated.
Additionally, several creditors, such as Voyager Digital, have since come knocking on the door demanding that Three Arrows Capital repay its debts. This led to the liquidation order issued by the British Virgin Islands court earlier this week.
The hedge fund co-founder is also rumored to be trying to sell his $35 million Singapore mansion as a result of the ongoing financial turmoil facing Three Arrows Capital.
Su Zhu had once attracted attention to crypto through his Bitcoin supercycle theory, which predicted that the value of BTC could continue to rise to $2.5 million if it successfully captured a significant portion of gold’s market share as a digital store of value.