A federal judge in the New York Bankruptcy Court has frozen the remaining assets of the crypto hedge fund Three Arrows Capital after the company became obscure.
Founded almost 10 years ago, the fund managed $ 10 billion in assets just a few months ago. Currently, the two co-founders are hiding from angry creditors trying to recover some of their losses. Prior to filing for bankruptcy, a court in the British Virgin Islands ordered the distressed fund to be liquidated in order to repay the debt.
Judge Martin Glenn of Southern New York approved an urgent motion to freeze Three Arrows’ assets on Tuesday. CNBC participated in a court hearing covering the next steps in the bankruptcy process.
Glenn said in a written decision that only the assigned bankruptcy liquidator has the authority to “assign, obstruct, or otherwise dispose of the debtor’s assets within US jurisdiction.” I did.
As part of Glenn’s decision, Teneo, a global advisory firm assigned to control liquidation, is co-founder of Subpoena’s Three Arrows, Chusoo and Kyle Davis, as well as banks, crypto exchanges and other institutions and companies. I also made a deal with a company that was given permission.
The main concern is that Three Arrows, also known as 3AC, and its leadership team may suck up funds prior to formal liquidation. Coindesk reports Zhu is about to sell $ 35 million in Singapore real estateAnd at least one other report Digital asset transfer of non-fungible tokens held by the fund..
“A key part of this move is to let the world know that it is the liquidators who manage the debtor’s assets at this stage,” said Adam Golberg, a lawyer representing Teneo, at a hearing on Tuesday. That’s it. “
Zhu and Davis did not respond to requests for comment. Their lawyer, Singapore-based advocacy lawyer Christopher Anand Daniel, also declined CNBC’s request for comment.
Goldberg, a law firm at Law Firm Latham & Watkins, said liquidators are looking for documents such as account statements and digital wallet information.
According to creditor lawyers, the main reason for the offensive behavior is that the physical whereabouts of Zhu and Davis are “currently unknown.”a creditor Also insist on it A Singaporean liquidator has found a vacant 3AC office. However, except for some inactive computer screens.
However, after a break from Twitter for almost a month, Zhu broke the silence on Twitter early Tuesday, writing that the company’s efforts to work with creditors were “feeding.”
From the verified account, Zhu shared a screen grab of an email sent by a lawyer to a lawyer representing the liquidator. In those messages, the lawyer wrote that the co-founder’s family was “threatening physical violence.” He also said Zhu and Davis “worked under a lot of time pressure” and “we had to answer a question from the Monetary Authority of Singapore last week.”
Attorney Daniel said in an email that he would attach a spreadsheet detailing the company’s assets and provide additional information about the company’s assets “on a rolling basis.”
CNBC requested a spreadsheet from Daniel, but didn’t get a reply. Goldberg said in a hearing that the information provided to his team was “never enough cooperation.”
Nic Carter of Castle Island Ventures, which invests in blockchain-based companies, said the process could eventually take years.
“You won’t hold your breath to see the situation settle,” Carter said. “I am very worried about the disposal of assets and try to release the assets owed to the creditors or perhaps expropriated assets and suck them out of the process for personal use of the principles here. . “
According to Carter, the case is particularly complicated because it involves entities in Dubai, Singapore and other offshore locations.
“The level of coordination needed to unify the legal process here is very important,” Carter said.
— CNBC’s Dan Mangan contributed to this report.
