A British Virgin Islands (BVI) court has issued a freezing order on approximately $1 billion in assets belonging to the founders of Three Arrows Capital (3AC), a once-renowned cryptocurrency hedge fund.
The court’s decision aims to prevent co-founders Su Zhu and Kyle Davies, along with the latter’s wife Kelly Chen, from transferring or disposing of assets up to $1.14 billion to safeguard the interests of its creditors owed $3.3 billion.
Teneo Asserts Founders’ Decisions Led to $3.3 Billion Debt
This legal action, as disclosed by the liquidator Teneo in an email statement, comes in the wake of allegations that the founders’ decisions played a critical role in the firm’s downfall.
Teneo, appointed by the British Virgin Islands court, has been actively pursuing claims against the founders, asserting that their actions directly contributed to 3AC’s substantial financial losses. According to Teneo, creditors of Three Arrows Capital are estimated to be owed $3.3 billion.
He added that the worldwide freezing order is connected to claims that the founders should be held accountable for their role in increasing 3AC’s financial troubles, which is equivalent to the frozen assets’ value.
3AC Capital Founder’s Mounting Legal Challenges
This latest court order follows a series of legal setbacks for the 3AC founders. The asset freeze follows closely on the heels of a domestic freezing order issued by the Singapore Court.
Su Zhu was also arrested in Singapore this past September under charges related to the hedge fund’s collapse.
Zhu’s arrest occurred at Changi Airport as he attempted to leave Singapore. This country has since barred both Zhu and Davies from engaging in regulated financial activities within its jurisdiction.
Three Arrows Capital, which had its operations primarily based in Singapore, filed for bankruptcy in the British Virgin Islands.
The firm, once a leading player in the crypto-native hedge fund space, failed in 2022 following a series of leveraged bets that backfired amidst a broader cryptocurrency market downturn.
The Three Arrows saga echoes the broader challenges facing the crypto industry. The sector has witnessed the fall of several prominent figures who thrived during the bull run, only to face severe consequences due to risky financial practices.
Among these is Sam Bankman-Fried, FTX Trading Ltd.’s founder, who was convicted of fraud after a high-profile trial last month.
Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
The post appeared first on CryptoPotato
