Legal Woes Mount for Three Arrows Capital Founders as BVI Court Freezes $1.1 Billion in Assets

In a significant legal development, a British Virgin Islands (BVI) court has issued an order to freeze assets valued at up to $1.1 billion belonging to Su Zhu and Kyle Davies, the founders of the now-defunct crypto hedge fund Three Arrows Capital. The freezing order, granted on December 18, extends to assets held globally by Zhu, Davies, and Davies’ wife, Kelly Chen, as confirmed by the company’s liquidator, Teneo.

Teneo, overseeing the liquidation process, revealed that the worldwide freezing order is linked to claims pursued by the liquidators. Allegations include holding the founders responsible for the decline in Three Arrows Capital’s position, equivalent to the value specified in the freezing orders. This move signals a significant legal challenge, and Teneo disclosed that a Singapore court has concurrently granted a domestic freezing order.

The legal actions against Zhu and Davies gained momentum after Zhu’s arrest at Singapore’s Changi airport in September. Subsequently, Zhu faced questioning in a Singapore court last week, responding to Teneo’s efforts to recover $3.5 billion for creditors of Three Arrows Capital. The company filed for bankruptcy in July 2022 amid market turmoil caused by the collapse of the Terra ecosystem, leaving creditors owed at least $3.5 billion, according to documents filed at the time.

This recent development underscores the mounting legal complexities surrounding the founders of Three Arrows Capital. The freezing of assets, both globally and domestically, adds a layer of challenge to Zhu, Davies, and Chen, as they navigate the legal repercussions of the hedge fund’s bankruptcy. The allegations of causing financial deterioration further intensify the legal battle, setting the stage for a protracted legal process.

The court’s decision in the BVI aligns with the ongoing efforts by the liquidators to hold the founders accountable for the financial setbacks suffered by Three Arrows Capital. The freezing order, applicable worldwide, emphasizes the gravity of the allegations and the determination of the legal authorities to protect the interests of creditors.

As legal proceedings unfold, the fate of the frozen assets and the outcome of the claims against Zhu, Davies, and Chen remain uncertain. The simultaneous domestic freezing order in Singapore amplifies the legal challenges faced by the founders, indicating the complexity of the case. The unfolding legal saga serves as a cautionary tale within the crypto industry, highlighting the need for robust regulatory compliance and risk management.

Legal Quagmire Deepens for Three Arrows Capital Founders: BVI Court Freezes $1.1 Billion in Assets Amidst Global Legal Challenges

The BVI court’s decision to freeze $1.1 billion in assets belonging to the founders of Three Arrows Capital marks a significant chapter in the legal aftermath of the hedge fund’s bankruptcy. The complexities of global asset freezing orders and concurrent domestic legal actions underscore the intricate challenges faced by Zhu, Davies, and Chen as they navigate the legal repercussions of Three Arrows Capital’s downfall.

Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.

Author: Mehar Nayar

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