Three Arrows Capital's (3AC) founders refuse to cooperate with liquidators.
The world’s largest crypto hedge funds filed bankruptcy in late June.
Liquidators found that founders are more concerned with their reputation than with creditors.
the cryptocurrency industry. Later, the company encountered multiple investigation charges, which were initially supported by its founders.
However, recent reports revealed that the company's founders, Kyle Davies and Su Zhu, are refusing to assist liquidators with asset recovery attempts, making it difficult for the company to repay creditors.
Three Arrows Capital was the first major cryptocurrency company to go bankrupt in 2022, following the meltdown of cryptocurrencies Luna and TerraUSD in May. It filed for bankruptcy in the British Virgin Islands in late June.
The liquidators were appointed by the court to wind down the company and settle its liabilities. They filed a parallel bankruptcy lawsuit in Manhattan to protect Three Arrows' assets in the United States.
Meanwhile, liquidators for 3AC said that the company's founders are refusing to assist with asset recovery attempts. Experts noted that the founder's Kyle Davies and Su Zhu are more interested in rehabilitating their reputation than helping their own company's creditors.
According to a court briefing, “a communication protocol was agreed upon between the liquidators and the founders but has not resulted in satisfactory cooperation.”
The liquidators said that the company's founders are in Indonesia and the United Arab Emirates, where international court orders are difficult to enforce.
As per earlier reports, the founders also refused to accept service through their Singapore lawyers, prompting the liquidators to seek alternative measures to summon Davies & Zhu.
The same day, Bloomberg reported that US regulators had launched an investigation into suspected legal infractions by 3AC, including whether the hedge fund misled investors and failed to register with the necessary institutions.
This indicates that the founders of 3AC are less concerned with repaying creditors and more concerned with restoring their reputation.
Yesterday, the High Court of the Republic of Singapore ordered 3AC and its co-founders to submit affidavits detailing their connections with the company. The information in those affidavits could be crucial for liquidators, who have been working to identify funds and figure out how to settle claims with creditors.
However, if the company releases the affidavit, it might be great news for the creditors; otherwise, it might place the 3AC in additional difficulties.
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