Singapore Authorities Grant 3AC Liquidators’ Approval to Probe Financial Records

According to reports, Three Arrows Capital liquidators have been given the go-ahead to probe the company’s financial records. The Singaporean High Court has granted the request to scrutinize the struggling hedge fund manager’s account following the unfortunate collapse of the company.

Authorities Okay Liquidators’ Request

The Singapore court granted the advisory firm Teneo’s request to examine Three Arrows Capital’s liquidity claim. Accordingly, the British Virgin Islands appointed Teneo two months ago to liquidate the hedge fund after the crash of its assets. 

However, the court has given Teneo the jurisdiction to handle all financial records linked to 3AC’s assets in Singapore. The assets include digital currencies, bank accounts, non-fungible tokens (NFT), and other properties.

In 2012, Su Zhu and Kyle Davies founded Three Arrows Capital as hedge fund managers. However, in May 2022, the company slid into liquidation after creditors filed a lawsuit against it for failing to repay its debt, which ran into billions of dollars.

3AC filed for bankruptcy in the United States in July amid the crypto market bloodbath caused by the Terra ecosystem collapse. In the meantime,

The liquidators have recovered close to $40 million worth of assets belonging to the fund manager. Sources familiar with the development revealed that creditors still owe over $2.8 billion. And half of this sum belongs to Digital Currency Group Inc., the Connecticut-based venture capital firm.

Co-founder Slammed Hedge Fund Liquidators

In another interesting development, 3AC’s co-founder, Su Zhu, has labeled the hedge fund’s liquidator, Teneo’s statement, as inaccurate.

Zhu claimed that Teneo failed to fully disclose the event to the court after being approved to probe the firm’s finances. Furthermore, the co-founder noted that Three Arrows Capital has a complex network of companies operating in different jurisdictions. 

The jurisdictions include Singapore, the British Virgin Islands, and the state of Delaware, United States of America. Due to the different structures, the Singapore-based 3AC may not be able to fully comply with the liquidator’s request. The co-founder insists that Teneo misrepresented facts before the public and calls for a stop.

Reports about 3AC’s impending insolvency started making the rounds in June after the crypto market plunged to its lowest in more than a year. The hedge fund has secured multiple high-interest loans to bet on crypto prices. During the same period, Voyager Digital’s $665 million loan to 3AC was trapped, leading to the latter’s insolvency problem.

Following the downtrend in the crypto market in mid-June, Three Arrows Capital experienced a loss of close to $400 million in liquidation.

The crypto industry was awash with liquidity claims from several exchanges following the price decline. In addition, the liquidity crisis was so widespread that major exchanges were affected.

Most crypto lenders were out of business due to the impact of the crisis. It has laid bare the interconnectedness of firms saddled with debts and the absence of a comprehensive risk management mechanism.