Crypto hedge fund Three Arrows Capital has filed for Chapter 15 bankruptcy of the US Bankruptcy Code, according to a court filing in the Southern District of New York on Friday.
Three Arrows Capital is one of the biggest victims of the latest so-called “crypto winter”. The digital asset ecosystem has been hit by both a broad market sell-off sparked by the Federal Reserve’s rate hikes and concerns about individual coins and crypto companies. Bitcoin BTCUSD,
The value of the dollar has fallen by more than a third this month.
The Chapter 15 bankruptcy filing in Manhattan federal court late Friday came days after Three Arrows in the British Virgin Islands went into liquidation over allegations it failed to pay $80 million it owed to digital asset exchange Deribit, Financial said. Times.
Three Arrows Capital operated as a regulated fund manager in Singapore until last year, when it moved its headquarters to the British Virgin Islands as part of a plan to relocate its operations to Dubai.
The fund, founded by former Credit Suisse traders Zhu Su and Kyle Davies, managed about $10 billion in assets as of March alone, according to blockchain analytics firm Nansen, Bloomberg reported.
Law firm Latham & Watkins is representing Three Arrows in the US bankruptcy. The case is Three Arrows Capital Ltd and Russell Crumpler, 22-10920, US Bankruptcy Court for the Southern District of New York (Manhattan).
Insolvency experts at Teneo, the BVI-appointed advisory firm to liquidate Three Arrows, told a US court that a “significant number of creditors” are expected to make claims against the hedge fund, the Financial Times reported.
In a sign of the scale of Three Arrows’ loans, Toronto-listed cryptocurrency lender Voyager Digital said in late June it could lose more than $650 million in loans it made to the crypto investment firm co-founded by Su Zhu and Kyle Davies.
Voyager late Friday announced it had suspended withdrawals and trading on its platform as it explores “strategic alternatives.”
I see: Crypto brokerage Voyager Digital shares fall as much as 40% after trading, deposits and withdrawals suspended
BlockFi, another major crypto lender, said on Friday that it had about $80 million in losses due to the Three Arrows collapse, even after unwinding some of its positions.
BlockFi also announced a deal in which FTX will provide it with new funding in exchange for an option that allows the crypto exchange to buy the group for up to $240 million.
See also: FTX Signs Deal To Rescue Cryptocurrency Lender BlockFi With Option To Buy Up To $240 Million
Three Arrows is also facing regulatory scrutiny in Singapore. The Monetary Authority of Singapore reprimanded the group this week for providing false information and breaching an asset under management. Authorities in Singapore said they had been investigating the Three Arrows for a year.
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