Court-appointed liquidators for cryptocurrency hedge fund Three Arrows Capital Ltd. said its founders can’t be located and aren’t cooperating in the investigation of its assets, allegations that the founders denied, WSJ Pro Bankruptcy reported. Liquidators installed to take charge of Three Arrows and protect its assets said in court filings last week that founders Su Zhu and Kyle Davies haven’t offered any meaningful cooperation with their investigation. Since then, the founders turned over only a “pro forma” disclosure of corporate assets that lacked bank account and other key information, the liquidators’ lawyer, Adam Goldberg, said in a court hearing Tuesday. “We don’t know where they’re located, today,” Mr. Goldberg said. In a statement to the Wall Street Journal, Zhu and Davies denied the allegation that they haven’t cooperated, given that they applied for the liquidation of the hedge fund themselves in the British Virgin Islands. Zhu and Davies said they have cooperated through Three Arrows’ former lawyers at Solitaire LLP and now through their personal lawyers at Advocatus Law LLP. Three Arrows’ collapse during the recent rout in cryptocurrencies has rippled out, causing problems for crypto firms that lent to it. Voyager Digital Ltd., a crypto lender that extended roughly $650 million in credit to Three Arrows, filed for chapter 11 protection last week when the uncollateralized loan went bad. A BVI court ordered the liquidation of Three Arrows and appointed the liquidators, who then petitioned for bankruptcy protection in New York to stay any collection efforts by creditors in the U.S. Other crypto firms also have exposure to Three Arrows, Mr. Goldberg said Tuesday. Read more.
In related news, liquidators for crypto hedge fund Three Arrows Capital (3AC) obtained U.S. court permission on Tuesday to issue subpoenas and lay claim to the bankrupt Singapore-based company's assets, noting that 3AC's missing-in-action founders no longer control its accounts, Reuters reported. U.S. Bankruptcy Judge Martin Glenn in Manhattan gave the liquidators authority to claim 3AC's U.S.-based assets and issue subpoenas to its founders and about two dozen banks and cryptocurrency exchanges that may have information about its assets and transfers. Adam Goldberg, a lawyer for the liquidators, said at an emergency hearing yesterday before Judge Glenn that the whereabouts of company founders Zhu Su and Kyle Livingstone Davies remain unknown. Without the founders' cooperation, the liquidators have been unable to get a complete view of 3AC's assets and their location, Goldberg said. The assets' digital nature creates a real risk that the founders or other parties will whisk them away unless stopped by a court order, he said. Zhu and Davies did not appear in bankruptcy court and did not oppose the liquidators' request for subpoena authority. Zhu tweeted for the first time in almost a month on Tuesday, saying the liquidators had rebuffed their good faith offer to cooperate. Read more. Read more.
