Protection file

Three Arrows Capital Files for Chapter 15 Bankruptcy Protection

Embattled crypto hedge fund Three Arrows Capital has filed for Chapter 15 bankruptcy in New York to protect its US assets after a winding-up order in the British Virgin Islands.

According Bloomberg, representatives of the hedge funds filed the bankruptcy petition on Friday. This decision will prevent creditors from seizing 3AC’s assets in the United States. 3AC has appointed the law firm Latham & Watkins to represent it in the bankruptcy case.

According to the filings, the essence of bankruptcy proceedings is to prevent any:

Active efforts by individual creditors to seize assets and preserve the status quo and give foreign representatives an opportunity [to] stabilize the debtor’s estate, preserve the debtor’s assets, and conduct a full investigation of the debtor, claims against his estate and assets, including causes of action.

The development comes just days after a court in the British Isles ordered the company to be liquidated. The court had appointed an advisory firm, Teneo, to handle the liquidation and appointed executives Christopher Farmer and Russell Crumpler to oversee the process.

According to data from blockchain analytics firm Nansen, 3AC had approximately $10 billion in assets under management in March. But the fund managed by Kyle Davies and Zhu Su has suffered seriously from the collapse of the Terra ecosystem.

Three Arrows owes several crypto companies

Already, crypto trading firms Genesis and BlockFi have liquidated 3AC positions after failing to meet margin calls. Deribit also claims that the hedge fund owes it $80 million consisting of 1,300 bitcoins, 15,000 ETH, and $37.1 million in negative assets.

Additionally, one of Three Arrows’ biggest creditors is Voyager Digital, which recently announced it was suspending withdrawals. The company says 3AC owes it more than $600 million and is one of the creditors who initiated the legal proceedings leading to the winding up of the hedge fund.

The hedge fund has also been criticized by the Monetary Authority of Singapore (MAS) for exceeding the assets under management threshold and providing false information. MAS added that it was still reviewing “whether there were any further violations by Three Arrows Capital of MAS regulations”.

Three Arrows Capital began operations in Singapore before moving to the British Virgin Islands in September 2021.


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