One of the largest crypto hedge funds in the world, Three Arrows Capital, filed for Chapter 15 bankruptcy in a New York court recently. There was a petition filed with the US Bankruptcy Court for the Southern District of New York shortly after the complaint was filed.
Chapter 15 filings are generally related to foreign proceedings. Three Arrows’ local branch in the British Virgin Islands was previously ordered into liquidation by a British Virgin Islands court, indicating that Friday’s filing was likely a result of that. The liquidations will be handled by Teneo Restructuring, a firm based in the U.S.
Earlier this week, Voyager Digital had suspended trading and withdrawals due to $646 million in unpaid loans to Three Arrows. On Monday, Voyager sent a notice of default to Three Arrows.
The British Virgin Islands court on Wednesday ordered the fund to liquidate due to an inability to pay off debts. Three Arrows was reprimanded on Thursday by the Monetary Authority of Singapore for providing it with “false information” and misrepresenting itself.
Three Arrows Capital was known for investing in crypto-related ventures before its insolvency. Established in 2012 by Su Zhu and Kyle Davies, the company boasts positions in a number of crypto’s largest projects and companies, including Bitcoin, Ethereum, Solana, Axie Infinity, and BlockFi.
It is estimated that Do Kwon’s algorithmic stablecoin, UST, lost nearly $200 million when the value of the stablecoin collapsed and destabilized in May. BitMEX, FTX, and Deribit have since liquidated 3AC’s positions. As a result of the collapse of Three Arrows, all eyes turn to similarly troubled Celsius, which is preparing to file for bankruptcy as well.
