In a year full of failures across the crypto industry, Three Arrows Capital’s (3AC) bankruptcy is one of the most dramatic and head-scratching of the bunch. The hedge fund’s days of managing billions of dollars are coming to an end with a bankruptcy filing and liquidation. But, it looks like the fund’s founders are going to make the process as difficult as possible. First going completely missing, the two founders of Three Arrows Capital are now breaking their silence online by bashing those involved with the legal proceedings.
When the Terra Classic (LUNC-USD) network collapsed in June, it spelled disaster for lots of investors. 3AC is one of the hardest-hit crypto investment firms as a result of the collapse, too; it had invested $200 million into the project in February. This price tanking, combined with exposure to Grayscale’s hard-hit staked Ethereum (ETH-USD) tokens, was massively detrimental to the firm’s balance sheet.
This then caused a domino effect of missed margin calls and steep unpaid debts — like the $670 million owed to now-bankrupt Voyager Digital and $270 million owed to Blockchain.com. The company’s practice of big borrowing and high-risk investment ended up coming back to bite it.
It’s being viewed as one of the most disastrous incidences of the volatility of crypto at work. One project’s collapse has led to billions of dollars being thrown away, and multiple bankruptcies. Three Arrows Capital filed for Chapter 15 bankruptcy last month. But now, as the company attempts to liquidate its remaining assets, founders Zhu Su and Kyle Davies aren’t making things very easy.
Three Arrows Capital Founders Go Missing
Last week, news broke that Three Arrows Capital founders Zhu Su and Kyle Davies were nowhere to be found. The two creditors appointed by the U.S. Bankruptcy Court to liquidate remaining assets and close out operations traveled to the 3AC office in Singapore. However, upon arriving, the liquidators reported that Su and Davies had abandoned the office. Now, their whereabouts are unknown.
The two have been, until today, radio silent on social media for a month now. And, when it comes to legal proceedings, they aren’t cooperating. The two attended a Zoom call with lawyers recently, but neither would turn on their cameras nor answer questions directed at them. Existing 3AC assets are in the form of easily-transferrable cash, crypto and non-fungible tokens (NFTs). Given this information, there are now concerns that the two could try to pocket the assets. As a result, the lawyers are requesting that the court freeze 3AC’s assets and require the company to report them.
Zhu Lashes Out at Liquidators via Twitter
Zhu Su is breaking his silence on the bankruptcy for the first time today, pulling no punches against the liquidation team. In his first tweet since early June, Zhu is publishing emails from the legal team; he accuses the lawyers of “baiting,” and asserts that he and Davies are acting in good faith with the proceedings. Davies, while not making his own comment on the matter, retweeted Zhu’s post. As of yet, the location of the two is still unknown. Advocatus LLP, the legal team representing 3AC, notes Zhu and Davies are facing a string of threats on their safety in the wake of the bankruptcy.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
