Crypto hedge fund Three Arrows files for bankruptcy in the US

Crypto hedge fund Three Arrows files for bankruptcy in the US

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Crypto hedge fund Three Arrows Capital has filed for Chapter 15 bankruptcy, according to a filing in the Southern District of New York on Friday.

Three Arrows Capital is one of the biggest victims of the last “crypto winter”. The digital asset ecosystem has been hit by both a broad market sell-off triggered by Federal Reserve interest rate hikes and concerns about cryptocurrencies and individual businesses. Bitcoin’s BTCUSD,
-0.73%
dollar value has fallen by more than a third this month.

The Chapter 15 bankruptcy filing in Manhattan federal court on Friday night came just days after Three Arrows went into liquidation in the British Virgin Islands, following allegations that it failed to pay 80 million he owed to digital asset exchange Deribit, the Financial Times reported.

Three Arrows Capital operated as a regulated fund manager in Singapore until last year, when it moved its domicile to the British Virgin Islands, as part of a plan to relocate its operations to Dubai.

The fund, founded by former Credit Suisse traders Zhu Su and Kyle Davies, was managing around $10 billion in assets as recently as March, according to blockchain analytics firm Nansen, Bloomberg reported.

Law firm Latham & Watkins is representing Three Arrows in the US bankruptcy. The case concerns Three Arrows Capital Ltd and Russell Crumpler, 22-10920, US Bankruptcy Court for the Southern District of New York (Manhattan).

Insolvency specialists at Teneo, the consultancy appointed in the British Virgin Islands to liquidate Three Arrows, told the US court that a “significant number of creditors” would have to make claims against the hedge fund, the report reported. Financial Times.

In a sign of the scale of Three Arrows’ borrowing, Toronto-listed crypto lender Voyager Digital said in late June that it could lose more than $650 million in loans it made to the investment firm in crypto co-founded by Su Zhu and Kyle Davies.

On Friday night, Voyager announced it was suspending withdrawals and trading on its platform as it explored “strategic alternatives”.

See: Crypto Brokerage Voyager Digital Shares Drop Up To 40% After Trading, Deposits, Withdrawals Suspended

BlockFi, another major crypto lender, said on Friday that it suffered losses of around $80 million due to the collapse of Three Arrows, even after unwinding some of its positions.

BlockFi also announced a deal on Friday in which FTX will provide it with new funding in exchange for an option for the crypto exchange to buy the group for up to $240 million.

See also: FTX signs deal to bail out crypto lender BlockFi with option to buy up to $240 million

Three Arrows is also under regulatory scrutiny in Singapore. The Monetary Authority of Singapore reprimanded the group this week for providing false information and crossing an assets under management threshold. Singapore authorities said they had been investigating Three Arrows for a year.

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