The post Three Arrows Capital Liquidators Seek a Staggering $1.3B from Founders of Insolvent Hedge Fund appeared first on Coinpedia Fintech News

In a high-stakes bankruptcy drama, liquidators representing Three Arrows Capital are on a relentless pursuit for a jaw-dropping $1.3 billion from the founders of a now-bankrupt hedge fund, according to Bloomberg.

3AC Liquidators Seek $1.3 Billion From Zhu & Davies

The co-founders of the defunct crypto hedge fund, Three Arrows Capital, Su Zhu and Kyle Davies, are facing a $1.3 billion recovery claim from the fund’s liquidators. The liquidators, who are partners at the consultancy firm Teneo, accuse Zhu and Davies of causing losses equivalent to this amount.

The allegations suggest that the co-founders excessively leveraged the fund in the months leading up to the collapse of Three Arrows Capital, as per a Bloomberg report released today, which quoted an unnamed source. The liquidators are now seeking to recoup the losses, marking a significant development in the aftermath of the fund’s failure.

Allegations have been leveled against Su Zhu and Kyle Davies, the co-founders of Three Arrows Capital, accusing them of leading the hedge fund into a precarious position of substantial leverage between May and June 2022.

This move came after the fund experienced significant losses from unfortunate investments in Luna tokens and other ventures, according to an insider.

The liquidators argue that the firm was already on the brink of insolvency at this point. They are now initiating legal proceedings against Zhu and Davies in a court in the British Virgin Islands.

Liquidators To Accelerate Legal Actions

The collapse of Three Arrows Capital transpired during a period of decline in the crypto market. The repercussions of this failure were felt across various platforms that had ties to the hedge fund. Notably, BlockFi and Voyager Digital Ltd., both of which had significant exposure to the hedge fund, declared bankruptcy just weeks after Three Arrows Capital was liquidated.

The liquidators have intensified their actions against co-founders Zhu and Davies, accusing them of lack of substantial cooperation in their probe. Appointed by a BVI court last year, they are striving to recoup funds for Three Arrows’ creditors, who are due approximately $3.3 billion.

In a recent development, the liquidators appealed to a New York bankruptcy judge to impose a daily fine of $10,000 on Davies. They justified this hefty penalty in a court document, stating that Davies has failed to respond to a subpoena demanding business records and other relevant information

Following the collapse of their fund, Zhu and Davies initially retreated from the public eye, but eventually made a gradual comeback, first on social media and later in the entrepreneurial world.

Joining forces with Mark Lamb, the founder of CoinFLEX – a crypto lender that filed for restructuring in Seychelles last year, they started a new venture, a business named OPNX.

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Filed under: Bitcoin - @ June 27, 2023 4:12 pm