A court has frozen the assets of the Three Arrows Capital founders. The company owes .3 billion to creditors and filed for bankruptcy after the collapse of the Terra ecosystem last year. One of the most notable events in the crypto industry last year was the collapse of the Terra ecosystem. After Terra failed, many companies connected or exposed to it suffered losses as well. One of these was Three Arrows Capital which filed for bankruptcy in July 2022. Now, about billion in assets belonging to Three Arrows Capital’s three founders have been frozen by a British Virgin Islands court. The founders affected by this new court order are Su Zhu, who is currently in prison, Kyle Davies, and Kelly Chen. Three Arrows Faces More Woes Three Arrows faced a plethora of challenges once Terra
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A court has frozen the assets of the Three Arrows Capital founders. The company owes $3.3 billion to creditors and filed for bankruptcy after the collapse of the Terra ecosystem last year.
One of the most notable events in the crypto industry last year was the collapse of the Terra ecosystem. After Terra failed, many companies connected or exposed to it suffered losses as well. One of these was Three Arrows Capital which filed for bankruptcy in July 2022. Now, about $1 billion in assets belonging to Three Arrows Capital’s three founders have been frozen by a British Virgin Islands court. The founders affected by this new court order are Su Zhu, who is currently in prison, Kyle Davies, and Kelly Chen.
Three Arrows Faces More Woes
Three Arrows faced a plethora of challenges once Terra went under. It had taken our loans from several companies like BlockFi, Celsius, and Babel Finance, and once it could not pay back, it filed for Chapter 15 bankruptcy. At the time, it was believed that its Chapter 15 filing would protect its US-based assets even as liquidations took place.
Then, in September 2023, founder Su Zhu received a jail sentence for not cooperating in the company’s liquidation. The liquidation firm Teneo Restructuring estimates the money owed to customers of 3 Arrows is at around $3.3 billion and it is seeking around $1.3 billion to help settle these debts.
This is why Teneo Restructuring has sought to have these assets frozen. In a statement, it said, “The order is specifically designed to prevent the Founders and Ms. Kelly Chen from disposing of or otherwise dealing with assets in any way that might frustrate eventual enforcement by the liquidators.”
Three Arrows was one of the biggest crypto hedge funds in the world at its peak and its collapse cast a dark shadow over the crypto sector. Coupled with the later collapse of FTX, crypto-adjacent companies were looked at with suspicion by regulators and investors alike. The industry as a whole has been on the path to recovery but the Three Arrows Capital saga is far from over.
This is not unusual as when a firm of this size collapses, it can take years for creditors to receive their funds if at all. Customers of failed crypto businesses like Mt. Gox have been waiting for repayment for over a decade since the initial collapse and there seems to be no end in sight.
But this action by the British Virgin Islands court means that there are a billion dollars that cannot be moved for the foreseeable future. And once Su Zhu is released from prison, the liquidation process and distribution of funds to Three Arrows’ creditors can perhaps make more headway. What is clear at this point is that the story of Three Arrows Capital is far from over.