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The 3AC liquidators have recruited counsel in Singapore to convince the city-High state's Court to acknowledge the BVI liquidation judgment.
The liquidators of Three Arrows Capital (3AC) were granted temporary relief by the Singapore High Court on July 15 to investigate and safeguard the assets of the bankrupt crypto hedge fund in the city-state, according to The Straits Times.
Last month, the British Virgin Islands (BVI) court designated two employees of the New York-based financial advice firm Teneo as joint liquidators for 3AC. The liquidators have recruited the Singapore-based legal firm WongPartnership to petition the High Court to recognize the liquidation order issued by the BVI.
If the liquidation orders are recognized by the Singapore High Court, the liquidators will be entitled to continue the liquidation procedure in the city-state. The recognition would also allow the liquidators to summon 3AC co-founders Su Zhu and Kyle Davies, the whereabouts of whom have been unknown since last week.
The High Court's acknowledgment would also assist the liquidators improve their position, allowing them to collect 3AC's assets and satisfy its liabilities more quickly. According to The Straits Times, WongPartnership attorneys may even claim in court that Zhu and Davies mishandled 3AC, causing company to fail.
If successful, such an argument may result in the seizure of the founders' assets for the benefit of 3AC's creditors.
The demise of 3AC
3AC managed around $10 billion in assets as of March 2022. The price of Bitcoin and all other cryptocurrencies then began to plummet in April, which was hastened by the collapse of the Terra ecosystem in May.
Rumors of 3AC's bankruptcy first surfaced in mid-June, when the hedge firm began dumping big assets, including $40 million in Lido staked Ethereum (stETH). Crypto traders and experts speculated that the transaction was an attempt to avoid the liquidation of big loans on Aave and Compound.
According to the Financial Times, 3AC failed to fulfill loan margin calls and was liquidated by Genesis and BlockFi. Then, cryptocurrency lender Voyager Digital slapped 3AC with a default notice for failing to repay around $650 million.
A BVI court ordered the liquidation of 3AC on June 30. On July 1, the hedge fund filed for Chapter 15 bankruptcy in order to preserve the firm's assets in the United States while the liquidation took place in the British Virgin Islands.
Despite the lifeline provided by Alameda Research, Voyager Digital filed for Chapter 11 bankruptcy on July 5 due to its exposure to 3AC. According to Reuters, crypto exchange Blockchain.com faces a $270 million loss on its loan to 3AC.
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