{"id":28677,"date":"2023-06-28T11:37:55","date_gmt":"2023-06-28T15:37:55","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/crypto\/3ac-founders-face-1-3-billion-claim-from-liquidators\/"},"modified":"2023-06-28T11:37:56","modified_gmt":"2023-06-28T15:37:56","slug":"3ac-founders-face-1-3-billion-claim-from-liquidators","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=28677","title":{"rendered":"3AC Founders Face $1.3 Billion Claim from Liquidators"},"content":{"rendered":"
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The founders of the now-bankrupt crypto hedge fund Three Arrows Capital, also known as 3AC, are facing a $1.3 billion recovery claim from the fund\u2019s liquidators.<\/p>\n

The liquidators, who are also partners at the consulting and advisory firm Teneo, have accused the firm\u2019s co-founders Su Zhu and Kyle Davies of incurring debt when the firm was insolvent.<\/p>\n

Per the allegations, the co-founders have taken on \u201csignificant\u201d leverage between May and June 2022, after the hedge fund suffered heavy losses following the collapse of LUNA and its algorithmic stablecoin UST.\u00a0<\/p>\n

The court-appointed officials claim that by that time, the firm was already on the brink of insolvency, a Bloomberg report said.<\/p>\n

The fund’s liquidators are now seeking to recoup the losses, which is a part of the $3.3 billion owed to 3AC creditors. They had discussions with the hedge fund\u2019s creditors regarding the allegations against Zhu and Davies at a Tuesday meeting, a person familiar with the matter told Bloomberg.<\/p>\n

Three Arrows Capital filed for bankruptcy in the British Virgin Islands in late June 2022, following which a regional court ordered 3AC into liquidation.<\/p>\n

Liquidators Intensify Legal Actions<\/h2>\n

The collapse of Terra ecosystem coins LUNA and UST, along with the subsequent fallout of 3AC, had a widespread impact on the cryptocurrency market and platforms connected to the hedge fund.\u00a0<\/p>\n

BlockFi and Voyager Digital Ltd., two platforms with substantial exposure to 3AC, filed for Chapter 15 bankruptcy shortly after the liquidation of the hedge fund.<\/p>\n

According to the court papers, the founders of 3AC have not cooperated with the liquidation process. The bankruptcy filing noted that the company owes $3.5 billion to 27 companies, including $2.3 billion to Genesis Global Trading.<\/p>\n

Additionally, the founders were also accused of meddling with customer funds, to which, Zhu Su posted a tweet<\/a> saying 3AC\u2019s good faith to cooperate with liquidators was met with \u201cbaiting\u201d.<\/p>\n

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In a recent event, the estate of the collapsed hedge fund filed a legal document, asking the court to impose a daily fine of $10,000 on Davies, noting his disregard for previous requests. The document pointed out the co-founders\u2019 extravagant lifestyles.\u00a0<\/p>\n

Per a recent report, Davies flew to Bali, a year after the company collapsed in June\u201922, and was found painting in cafes, reading Hemingway on the beach, and touring Thailand, Malaysia, Dubai, and Bahrain.<\/p>\n<\/p><\/div>\n