Liquidators representing Three Arrows Capital, the failed crypto hedge fund, are reportedly seeking to recover $1.3 billion from the fund’s co-founders. The amount sought is said to reflect the losses accumulated by the founders in the months leading up to the collapse of the firm.
In a recent report by Bloomberg, it was disclosed that the liquidators held a meeting with the hedge fund’s creditors on Tuesday, where they discussed the allegations against Three Arrows co-founders Su Zhu and Kyle Davies. The unnamed source, who is knowledgeable about the liquidators’ claims, stated that Zhu and Davies are accused of subjecting the firm to significant leverage despite its insolvency and substantial losses after the downfall of the Terra (LUNA) ecosystem.
Back in July 2022, reports emerged highlighting the challenges faced during the bankruptcy proceedings of Three Arrows Capital, with liquidators accusing the co-founders of a lack of cooperation.
During that time, Su Zhu expressed dissatisfaction with the liquidators via a tweet. He wrote, “Sadly, our good faith to cooperate with the Liquidators was met with baiting.”
The liquidators handling the case are partners at the consulting firm Teneo and were appointed by a court in the British Virgin Islands last year. Creditors of Three Arrows Capital are reportedly owed a total of $3.3 billion, including the $1.3 billion currently being pursued.
This month, the liquidators made a request to a New York bankruptcy judge to impose a fine of $10,000 per day on Kyle Davies. The fine is related to Davies’ alleged failure to respond to a subpoena demanding business records, as detailed in the report.
The proceedings surrounding the liquidation of Three Arrows Capital continue, with the liquidators diligently working to recover funds for the creditors.