3AC Liquidators Aim to Recover $1.3 Billion from Founders

According to exclusive information obtained by CryptoGrafos, Teneo, the liquidator overseeing the bankruptcy of hedge fund Three Arrows Capital (3AC), is making efforts to recover approximately $1.3 billion from the founders, Su Zhu and Kyle Davies.

A recent report by Bloomberg revealed that Teneo alleges that Davies and Zhu accumulated the $1.3 billion debt while 3AC was already insolvent, exacerbating the losses incurred by creditors. The total debt owed by 3AC to creditors was reportedly $3.5 billion, making the potential liability of the founders more than one-third of the overall debt.

A spokesperson from Teneo confirmed to CryptoGrafos that the pursuit of $1.3 billion from the 3AC founders aligns with a creditor presentation given on June 27. However, this information has not yet been officially included in court documents at the time of publication.

This development comes exactly one year after a court in the British Virgin Islands ordered the liquidation of 3AC on June 27, 2022. In July of the same year, the firm filed for Chapter 15 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York.

Despite the liquidation process, Davies and Zhu have maintained a presence on social media, although their physical whereabouts have largely remained undisclosed. In June, they played a role in the launch of Open Exchange, a platform dedicated to trading claims against bankrupt cryptocurrency entities.

In the U.S., the liquidator’s legal team has sought to compel Davies and Zhu to appear in court during the bankruptcy proceedings. Digital subpoenas have been issued to both founders, and the legal team has pursued holding Davies in contempt of court for allegedly failing to fulfill his obligations.

Former assets of the 3AC founders include a digital art collection that is being auctioned through Sotheby’s. One artwork from the collection, Dmitri Cherniak’s “The Goose,” was sold for $6.2 million in June, highlighting the potential value that may contribute to the recovery efforts.

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