Three Arrows Capital Founders Face $1.1B Asset Freeze

A British Virgin Islands court has taken a significant step, issuing an order to freeze assets valued at around $1.1 billion associated with Su Zhu and Kyle Davies, the co-founders of the now-defunct cryptocurrency hedge fund, Three Arrows Capital. Adding to this, Kyle Davies' wife, Kelly Chen, also falls under this asset freeze.

This action follows a series of legal manoeuvres initiated by liquidators seeking recompense for creditors while pursuing claims against the fund's founders.

Teneo, the appointed liquidator, confirmed the freeze order, intending to prevent Zhu, Davies, and Chen from accessing their assets globally. The freeze pertains to claims suggesting that the founders' actions contributed to the financial decline of Three Arrows Capital, with the freezing orders matching the alleged losses.

According to Teneo, the sought-after global freezing order is linked to claims pursued by the liquidators. These claims allege that the Founders bear responsibility for the deterioration of 3ACs position, an amount matching the value of the freezing orders sought.

This recent development compounds the legal challenges confronting the Three Arrows founders. Not long ago, a Singapore court issued a similar freezing order, following Su Zhu's arrest at Singapores Changi airport in September. Teneo's aim is to recuperate $3.5 billion for creditors, a dire necessity after the fund faced insolvency due to the upheaval caused by the Terra ecosystem's collapse earlier in the year.

In July 2022, Three Arrows Capital filed for bankruptcy, leaving creditors in the lurch for at least $3.5 billion, according to documents from that time. The fund, once a powerhouse in the crypto hedge fund domain, managed an estimated $10 billion in assets, diversifying investments across liquid tokens, startup equity, and NFTs.

The liquidators, Teneo, encountered hurdles in obtaining cooperation from Zhu and Davies since the fund's demise. Their lack of collaboration triggered legal recourse, including attempts to subpoena the duo via social media, coupled with allegations pointing to $1.3 billion in losses attributed to actions undertaken by the founders leading up to the fund's collapse.