Three Arrows Capital Ordered Into Liquidation by BVI Court: Report

key takeaways

Three Arrows Capital must now formally liquidate assets tied to its British Virgin Islands company, according to Sky News
It’s not immediately clear what assets Three Arrows Capital still has or what this means for its creditors

Three Arrows Capital (3AC), the crippled cryptocurrency hedge fund firm, has been ordered into liquidation by a British Virgin Islands (BVI) court, reports Sky News citing a source familiar with the matter.

A BVI court reportedly ordered 3AC to liquidate its assets on Monday. Partners from global consulting firm Teneo Restructuring were said to be managing 3AC’s insolvency. 3AC is headquartered in Singapore but incorporated in BVI.

In these circumstances, restructuring units such as Teneo mainly focus on protecting the assets of the liquidated company, as well as determining who its creditors are.

Two Teneo operatives have been appointed to lead 3AC’s liquidation process, Blockworks has learned. Teneo will now set up a website via which creditors can make claims against 3AC, according to one source familiar with the matter.

The firm was founded in 2012 by cryptocurrency investors Su Zhu and Kyle Davies. 3AC operated crypto hedge funds as well as serving as venture capitalists across the digital asset space.

3AC has been dogged by insolvency rumors over the past few weeks, including that it suffered upwards of $400 million in liquidations as cryptocurrency markets collapsed between May and June.

Blockchain project Kyber Network, in which 3AC had invested, later detailed the firm’s treasury management services, which involved entrusting a portion of its capital with 3AC for potential profit. Those funds are still unaccounted for.

Blockworks reported similar instances affecting decentralized protocols across the cryptocurrency sector. 3AC offered its backed startups 8% annualized yield on treasury assets it managed.

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Around the same time, the chief executive of trading outfit 8 Blocks Capital alleged 3AC had misappropriated $1 million of its funds.

But the full extent of 3AC’s financial strife was confirmed last week when digital asset manager Voyager Digital revealed 3AC had failed to make payments on loans made up of $350 million in USDC and 15,250 BTC ($306 million).

Voyager Digital issued 3AC a notice of default on Monday — the same day a BVI court ordered the firm into liquidation.

Additional reporting by Sebastian Sinclair.

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