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Singapore Allows 3AC Liquidators to Probe Defunct Fund: Report

The Singapore High Court has recognized the liquidation order against Three Arrows Capital, originally filed in the British Virgin Islands, allowing liquidators to probe the fund’s finances in the country.

Singapore Allows 3AC Liquidators to Probe Defunct Fund: Report
Photo: Suvashree Ghosh/Bloomberg

Key Takeaways

  • The Singapore High Court has recognized the liquidation order against Three Arrows Capital.
  • The ruling allows Teneo, an advisory firm appointed to liquidate Three Arrows, to probe the fund's assets held in Singapore.
  • So far, the liquidator has managed to secure about $40 million of Three Arrows' assets, a tiny fraction of the $2.8 billion the fund's creditors claim they're owed.

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The ruling means that the liquidators will be able to inspect Three Arrows Capital’s assets held in Singapore.

Singapore Recognizes Three Arrows Liquidation Order

Three Arrows Capital’s liquidators have been approved to commence a probe into the fund’s assets in Singapore.

According to a Wednesday Bloomberg report, the Singapore High Court has recognized the liquidation order, originally filed in the British Virgin Islands, against the bankrupt crypto fund Three Arrows Capital. The move means that Teneo, the financial advisory firm appointed to liquidate the fund’s assets, will be able to inspect Three Arrows’ bank accounts, real estate, and cryptocurrency holdings held in Singapore. The liquidator lacked a legal basis to request information from banks, exchanges, and other entities before the local court formally recognized the liquidation order.

Teneo’s mandate is to round up, preserve, and eventually liquidate the firm’s remaining assets to repay creditors. According to the report, the liquidator has so far managed to seize about $40 million of Three Arrows’ assets, representing a tiny fraction of the $2.8 billion in unsecured claims that the creditors, including Digital Currency Group and Voyager Digital, claim they’re owed.

Reports that Three Arrows Capital—run by the once-beloved crypto community figures Kyle Davies and Su Zhu—could be facing insolvency issues began circulating in June after the market plunged to its lowest levels in over 18 months. The fund had taken multiple nine to 10-figure loans to bet on crypto prices rising and got caught off guard as the market crashed in the fallout from Terra’s collapse in May. On June 27, Voyager Digital reported that Three Arrows had defaulted on a $665 million loan, plunging the crypto firm into its own insolvency issue. Two days later, a British Virgin Islands court ordered Three Arrows to liquidate its holdings and appointed Teneo in charge of the process.

After filing for Chapter 15 bankruptcy in New York, Davies and Zhu went quiet on Twitter, defying their previous habit of sharing controversial takes on the crypto market with their loyal audiences. According to a 1,157-page affidavit penned by Teneo in July, Zhu and Davies “refused to meaningfully engage (or engage at all)” with their creditors and liquidators, raising concerns that they may be trying to put their assets “beyond the reach of the company’s creditors.”

Davies and Zhu finally broke their silence in an extended Bloomberg interview in July, where they revealed that Terras collapse and the subsequent market crash had been the firms unravelling. “We positioned ourselves for a kind of market that didn’t end up happening,” Zhu said, reflecting on the failed “Supercycle” thesis that made the pair stars during the 2021 bull run. “The whole situation is regrettable,” added Davies.

Disclosure: At the time of writing, the author of this article owned ETH and several other cryptocurrencies.

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