Court freezes Three Arrows Capital founders’ $1B in assets

A court in the British Virgin Islands has implemented a worldwide freezing order on assets worth up to $1.1 billion owned by Su Zhu and Kyle Davies, co-founders of the now-closed cryptocurrency hedge fund Three Arrows Capital (3AC). Dated December 18, the court order extends to assets held by Kyle Davies’ wife, Kelly Chen.

The primary objective of this freezing order is to prohibit the founders and Kelly Chen from engaging in any transactions involving their assets on a global scale.

Teneo, the liquidator overseeing the case, stated that the request for this global freezing order is directly linked to active claims pursued by the liquidators in their efforts to address the situation.

Among various issues, these claims contend that the founders bear responsibility for the decline in Three Arrows Capital’s financial position—an amount equivalent to the value of the freezing orders sought.

Established in 2012 by Kyle Davies and Su Zhu, Three Arrows Capital, a Singapore-based cryptocurrency hedge fund, took on substantial borrowing to support its trading activities. 

As indicated in bankruptcy filings from July 2022, the firm grapples with creditors’ claims amounting to $3.5 billion.

The court in the British Virgin Islands mandated the fund’s liquidation on June 27, 2022, following financial challenges triggered by market fluctuations and high-risk trades, rendering it unable to meet its debt obligations.

Post-liquidation, the co-founders of the crypto hedge fund proposed a new platform to address crypto debt claims.

The recent decision by the BVI court coincides with the arrest of Su Zhu in September at Singapore’s Changi airport while attempting to depart the country. 

Zhu underwent questioning in a Singapore court last week as part of the ongoing endeavors by Teneo, 3AC’s liquidator, to recover $3.5 billion on behalf of creditors.

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