Legal Tangle Tightens Around Three Arrows Capital Founders

British Court Freezes $1 Billion in Assets

In a significant development, a court in the British Virgin Islands has issued an order freezing assets worth approximately $1 billion. These assets belong to the co-founders of Three Arrows Capital, a prominent cryptocurrency hedge fund. This decision follows closely on the heels of a similar directive from a Singapore court.

Details from the Courtroom

The court's ruling specifically targets assets owned by Su Zhu and Kyle Davies, the co-founders of the fund. Additionally, Kelly Chen, Kyle Davies' wife, is now barred from transferring or disposing of any related assets. This move is part of broader efforts by the liquidators, Teneo, to secure assets amidst ongoing legal proceedings.

Zhu recently made an appearance in a Singapore court, facing questions about the fund's failure and the location of its assets. Creditors to Three Arrows Capital are reportedly owed in the vicinity of $3.3 billion. This has magnified the gravity of the situation, putting increased pressure on the fund's founders.

Teneo's Statement and Allegations

Teneo, appointed by the British Virgin Islands court as the liquidator, has openly accused the founders of a lack of cooperation. Their statement sheds light on the intentions behind the freezing order. It suggests that the founders might be held accountable for the fund's deteriorating position, correlating to the value of the frozen assets.

Backdrop of the Controversy

The troubles for Three Arrows Capital trace back to last year. A significant factor was their exposure to Terra, a stablecoin issuer. This led to the fund's collapse, once a titan in the crypto hedge fund space. This event, along with several other bankruptcies, triggered a so-called 'crypto winter', erasing trillions of dollars from the market. Other founders in the crypto sphere, such as Do Kwon and Alex Mashinsky, are also under scrutiny for their roles in these collapses.

The freezing of assets, while legally justified, underscores the fragility and volatility inherent in the cryptocurrency market, casting a shadow over its future stability and reliability.