Three Arrows crypto hedge fund files for bankruptcy

Cryptocurrency hedge fund Three Arrows Capital (3AC) has filed for Chapter 15 bankruptcy in a bid to protect its US assets from domestic creditors, as reported earlier by Bloomberg and CNBC. On Friday, representatives of the Singapore-based company filed the case in a court in the Southern District of New York, which legally protects US assets of insolvent foreign debtors from creditors in the United States.

Founded in 2012 by Kyle Davis and Su Zhu, 3AC managed around $10 billion in assets as recently as March, before dropping to $3 billion in April. Like several other crypto firms, including lending giants Celcius and Babel Finance, 3AC’s turnaround in fortunes is part of the so-called crypto “winter” that has taken stablecoins down and the value of Bitcoin plummeted.

Earlier this week, reports surfaced that 3AC failed to pay a $670 million loan provided by crypto broker Voyager Digital, which has since halted all transactions, deposits and withdrawals as a result. Sky News later reported that a court in the British Virgin Islands had ordered 3AC to be liquidated and that the company would work with business advisory firm Teneo to oversee the process.

In May, Davies and Zhu admitted in an interview with the WSJ that the company lost a $200 million investment following the crash of Luna and its sister coin TerraUSD. At the time, the two remained optimistic about the prospects for crypto, telling the WSJ that they have “always been believers in crypto” and “still are”.

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