Singapore-based crypto hedge fund Three Arrows Capital, 3AC has filed for Chapter 15 bankruptcy, to prevent creditors from seizing the firm’s assets in the US, Bloomberg reported.
According to the court filings, the law firm Latham & Watkins on the behalf of 3AC filed the bankruptcy petition in New York on 1st July.
The hedge fund, founded by former Credit Suisse traders Zhu Su and Kyle Davies, were valued at an estimated $10 billion in assets at one time, blockchain analytics firm Nansen revealed.
Ironically the same fund that bet big on everything from Bitcoin to the ill-fated Luna tokens has become the latest victim of a $2 trillion market wipeout that left it with huge unpaid debt on its borrowings.
Earlier this week, a British Virgin Islands court ordered the liquidation of 3AC for its failure of repaying the $80 million it owed to digital asset exchange Deribit.
Not only that, Three Arrows’ borrowings have caused headaches to many crypto lenders. In late June, Toronto-listed crypto lender Voyager Digital said that it could lose over $650 million in loans it offered to the crypto investment firm.
Things took a serious turn when Voyager announced that it was temporarily suspending withdrawals and trading on its platform while adding that it is “actively pursuing all available remedies for recovery from 3AC”.
BlockFi, another big crypto lender, said on Friday it had incurred nearly $80 million in losses due to the Three Arrows collapse.
This prompted BlockFi to sign a deal with FTX to inject fresh financing in exchange for a $240 million acquisition.
3AC Under MAS Scanner
Three Arrows is also facing regulatory scrutiny in Singapore. The Monetary Authority of Singapore [MAS] reprimanded the firm this week for providing false information and an alleged breach of assets under management between July 2020 to September 2020, and between November 2020 to August 2021.
The financial watchdog is investigating further breaches by the firm of its rules in light of “recent developments which call into question the solvency of the fund managed” by Three Arrows, it said Thursday.