Three Arrows Co-Founders’ $1 Billion in Assets Frozen by Court

Sidhartha Shukla, Bloomberg News

Three Arrows Capital office in Singapore. Photographer: Suvashree Ghosh/Bloomberg , Photographer: Suvashree Ghosh/Bloomberg

(Bloomberg) -- Around $1 billion in assets belonging to the founders of cryptocurrency hedge fund Three Arrows Capital have been frozen by a British Virgin Islands court, according to the firm’s liquidator.

The court issued an order preventing co-founders Su Zhu and Kyle Davies, as well as Davies’ wife Kelly Chen, from transferring or selling assets worth up to $1.14 billion, the liquidator Teneo said in an emailed statement, adding that it estimates creditors are owed roughly $3.3 billion.

Three Arrows, once among the largest crypto-native hedge funds, imploded in 2022 after a series of bad bets. The failure was part of a crypto rout and spate of collapses in the sector.

“The worldwide freezing order has been sought in connection with claims that are being pursued by the liquidators that allege, amongst other things, that the founders should be held responsible for causing 3AC’s position to deteriorate by an amount that is equivalent to the value of the freezing orders sought,” Teneo said.

Davies and a legal representative for Zhu didn’t respond to requests for comment.

Three Arrows previously operated out of Singapore and filed for bankruptcy in the British Virgin Islands. Teneo, appointed by a British Virgin Islands court as liquidator, has previously accused the founders of failing to cooperate meaningfully.

The announcement comes a day after a domestic freezing order was issued by the Singapore Court according to Teneo. It also follows Zhu’s arrest in September at Singapore’s Changi Airport as he tried to leave the country. Singapore has banned Zhu and Davies from conducting any regulated activity in Singapore.

Zhu is set to be released this month based on standard provisions for good behavior, Bloomberg News reported earlier.

Zhu and Davies are among the onetime stars of crypto’s bull run whose reputations and fortunes have fallen amid revelation of risky practices. Sam Bankman-Fried, the founder of FTX Trading Ltd. was convicted last month of fraud after a month-long trial that pitted his testimony against that of some of his closest friends.

(Updates with efforts to reach Zhu, Davies in paragraph 5.)