- Three Arrows Capital could be liquidated following a ruling by a British Virgin Islands court
- The hedge fund is being sued by a handful of companies to which it owes hundreds of millions of dollars
- Three Arrows Capital has been one of the biggest losers in the crypto crash
Three Arrows Capital, the cryptocurrency hedge fund that has been at the centre of the cryptocurrency liquidation web, could be going out of business after a British Virgin Islands court ordered that it should be liquidated. Numerous news outlets reported yesterday that Three Arrows Capital has been sued by creditors over failure to repay debts. The news comes just days after crypto exchange Voyager Digital issued a notice of default to the Singaporean fund for its failure to pay back a loan comprising 15,250 BTC and 350 million USDC.
Three Arrows Has Lost Hundreds of Millions This Year
Three Arrows Capital, created by Wall Street traders Su Zhu and Kyle Davies nearly a decade ago, had roughly $3 billion in assets under management in April, with big holdings in LUNA, stETH, and Grayscale Bitcoin Trust. LUNA famously went bust, with $60 billion simply falling out of the ecosystem, while stETH has been lagging the price of ETH and the Grayscale Bitcoin Trust is currently trading at a 29% discount to bitcoin.
This has left Three Arrows Capital in a perilous financial position, with Voyager Digital one of a handful of companies calling in loans from the hedge fund. Almost nothing has been said publicly from Three Arrows Capital or its founders, leading to unhelpful speculation about the state of the company, although the Wall Street Journal reports that “several” creditors have sued the firm in order to try and get their money back before it folds completely.
Teneo Handling Insolvency
Pressure on the firm will now be ramped up following the ruling from the court, with Nichol Yeo, a partner at law firm Solitaire LLP, telling the Wall Street Journal that Three Arrows Capital is considering its options and seeking legal advice in the territory. Bankruptcy protection looks to be the only way out for the hedge fund now, which would have an impact on liquidity for the entities to which it owes money.
Three Arrows Capital operated in Singapore until last year when it shifted its domicile to the British Virgin Islands as part of a plan to relocate its operations to Dubai. However, the final leg of its journey is destined not to be fulfilled. Sky News reported that global CEO advisory firm Teneo has been lined up to handle the insolvency, which has since been confirmed by the company.