Major crypto hedge fund Three Arrows Capital ( 3AC for short) ran into financial trouble last month after the Terra ecosystem (LUNA) crash. There was little to salvage, and now the company has filed for bankruptcy. At the same time, the founders have disappeared without a trace.
Protection against creditors
That writes the Financial Timesthat the bankruptcy filing has discovered. It must ensure that creditors do not just have a claim on the assets of the company. Three Arrows Capital had a huge amount of debt, which is why the fund will not be able to return everyone’s assets. The money is simply not there.
According to the documents, the creditors take precedence. So they are not just able to claim assets to get their lost capital. But these companies are probably not the worst off. For example, the companies that have given their cash to 3AC for an annual return are likely to lose out. They will probably not see any of their money back. Who will see money back will depend on the plethora of lawsuits.
Falling prices of cryptocurrencies aren’t helping either, though some of the debt is nominated in Bitcoin (BTC) and Ethereum (ETH). But, of course, 3AC itself also holds a lot of volatile assets. So it won’t matter that much.
Founders have disappeared without a trace
3AC founders Zhu Su and Kyle Davis are well known within the crypto world. A lot of funds wouldn’t want to work with them because they’know too well what they dEden† So they always knew how to make money on you when you traded against them. They had a good reputation and Zhu was also very vocal on Twitter.
But when the first rumors about bankruptcy started, Su was on Twitter suddenly very quiet† Yesterday it turned out that he has put his villas worth millions up for sale. He is trying to get $35 million for the crown jewel, while he would like to transfer the money to Dubai.
According to the legal document, the duo is rumored to have left Singapore. Their location is unknown. It’s not clear if they are a fugitive and for whatever reason, at least it doesn’t make things any better for Three Arrows Capital and the two traders.