Bitcoin Bloodbath: Three Arrows Capital Officially Files for Bankruptcy

Bitcoin Bloodbath: Three Arrows Capital Officially Files for Bankruptcy

Three Arrows Capital (3AC) has officially filed for Chapter 15 bankruptcy, days after a court in the British Virgin Islands ordered the liquidation of the company’s assets, reports Bloomberg on July 1, 2022.

Three Arrows Capital Kicks the Bucket

As the price of bitcoin (BTC) continues to find a bottom in what has been termed the worst crypto market collapse in history, 3AC, one of the oldest crypto hedge funds in the world, has finally kicked the bucket.  

It will be recalled that a court in the British Virgin Island earlier in the week, ordered the liquidation of all assets belonging to Three Arrows. 

In the latest development, the 10-year-old company has filed a bankruptcy petition in a New York court. With the petition of the Chapter 15 bankruptcy, creditors will not be able to seize any of 3AC’s assets in the United States.

The liquidation and subsequent bankruptcy are coming on the heels of a crypto market crash that has crippled virtually all sectors of the blockchain ecosystem, including enveloped lenders, exchanges, and investors.

The bitcoin (BTC) price has decreased by more than $70 percent since flirting with $70,000 last November, triggering a widespread bloodbath in the entire cryptospace. At the time of writing, BTC is trading around $19,205.  

Financial Advisory firm Teneo was chosen as the joint liquidator of the hedge fund, while the top executives, Christopher Farmer and Russell Crumpler were picked to oversee the liquidation process. 

The case is titled Three Arrows Capital Limited and Russell Crumpler, 22-10920, U.S. Bankruptcy Court for Southern District of New York. 

Three Arrows was represented by the law firm Latham and Watkins in the proceedings. In the papers filed with the New York bankruptcy court, Three Arrows said that ‘’ by filing the petition to start this chapter 15 case, foreign representative (Teneo) seek to prevent creditors from seizing the assets and to also preserve the status quo and afford the foreign representatives a chance to stabilize its estate and asset, and conduct a complete investigation of the debtor’s claim against its estate, assets, including causes and actions.’’

Gloomy Times 

Similarly, a report by this week fingered Three Arrows in an information scandal, involving the Monetary Authority of Singapore (MAS)

The apex bank, which also serves as the financial regulatory arm of Singapore reprimanded the hedge fund for providing false and misleading information and also accused them of breaching an asset under management threshold.

The regulatory body also faulted Three Arrows for refusing to notify them of major changes made in the directorship within the organization. 

The agency further indicated that they are still carrying out an investigation to find out whether  Three Arrows is involved in any other activities that are contrary to its directives. 

In the same vein, cryptocurrency broker Voyager Digital has also requested Three Arrows to pay back its loan, which is reportedly valued at $650 million. In a press release last month, Voyager disclosed that it could not ascertain how much it will be able to get from 3AC but it’s not ruling out taking legal steps to recoup its funds. The firm further stated that it could issue a notice of default if Three Arrows refused to pay back its loan.

Three Arrows is one of the biggest hedge funds in Asia, the firm was founded by former Credit Suisse traders Zhu Su and Kyle Davies and managed an estimated $10 billion in March, according to blockchain analytics firm, Nansen.

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