Three Arrows, founders of bankrupt crypto hedge fund, disappeared

Three Arrows, founders of bankrupt crypto hedge fund, disappeared
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The entire stablecoin market is currently valued at more than $160 billion.

Justin Tallis | AFP via Getty Images

Founders of the failed crypto hedge fund Three Arrows Capital He appears to be avoiding creditors, according to court documents recently filed in New York.

Lawyers representing the creditors said the physical whereabouts of Zhu Su and Kyle Davies, who started Three Arrows in 2012, are “currently unknown” ahead of a hearing scheduled for 9 a.m. ET on Tuesday to discuss the next steps in the liquidation process. they say. Documents submitted Friday evening also claim that the founders have yet to “significantly” begin collaborating with the liquidation process. On Monday, lawyers asked the court to keep the identity of creditors confidential.

Zhu and Davies did not respond to requests for comment.

Also known as 3AC, Three Arrows managed nearly $10 billion in assets as of March. On July 1, the firm filed for Chapter 15 bankruptcy protection with US creditors in the Southern District of New York after a decline in cryptocurrencies and the terraUSD (UST) stablecoin project destroyed its assets.

Prior to filing for bankruptcy, a court in the British Virgin Islands ordered that the beleaguered fund liquidate to repay its debts.

Now, 3AC is in bankruptcy court facing angry lenders who want their money back. Global consulting firm Teneo was hired to help manage the liquidation, starting with trying to identify what’s left.

According to Friday’s court filing, Zhu and Davies, both former traders of Credit Suisse, attended a publicity meeting. zoom in Call last week to discuss basic steps to protect assets. Both founders did not open their videos and both remained silent the entire time with all the dialogue conducted through the lawyer. His lawyers said they were “considering cooperating” at the time.

During the meeting, representatives who helped facilitate the liquidation process requested immediate access to 3AC’s offices and information regarding their bank accounts and digital wallets. The filing says that access is denied as of Friday.

When the fund’s liquidators had previously arrived at 3AC’s Singapore office in late June to meet with the founders, “the offices appeared empty except for a series of inactive computer screens.”

According to the file, when the office door is locked, agents can see the unopened mail sent to the Three Arrows “which appears to have been pushed under the door or leaning against the door.” Neighbors in surrounding offices said they last saw people at the 3AC office in early June.

Meanwhile, creditors try to determine what assets remain.

Russell Crumpler, of Teneo, who was tasked with helping facilitate the bankruptcy process, said in a sworn statement that there was “a real risk” for 3AC’s assets to disappear and that there was “no immediate mandate for discovery”.

“This risk is heightened as a significant portion of the borrower’s assets consist of cash and digital assets such as cryptocurrencies and immutable tokens,” Crumpler said in a statement. Said.

There are reasons for such concerns. One of 3AC’s NFTs transferred to another crypto wallet, According to a well-known NFT collector and investor.

In Friday’s filing, creditors request the court to suspend 3AC’s right to transfer or dispose of any asset. Lawyers also want the court to sue the founders or anyone else who may have knowledge of 3AC’s assets. This may include banks, crypto exchanges and counterparties.

The bankruptcy of 3AC has already had a huge impact on the wider crypto market, as so many institutions had to put money into the firm.

Digital asset brokerage Voyager Digital Filed for Chapter 11 bankruptcy protection 3AC after failing to repay roughly $670 million borrowed from the company. US-based crypto lenders Genesis and BlockFi, crypto derivatives platform BitMEX and crypto exchange FTX is also subject to losses.

TO WATCH: Voyager Digital suspends withdrawals as Three Arrows Capital files for bankruptcy

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