Three Arrows Capital, also known as 3AC, was founded in Singapore in 2012 by Kyle Davies and Su Zhu Cryptocurrency hedge funds. It fell into liquidation on June 27, 2022, and filed for Chapter 15 bankruptcy on July 3 after repeated accusations of default, which could have far-reaching consequences for the cryptocurrency market.
Three Arrows Capital was founded by Kyle Davies and Su Zhu, who both studied at Columbia University and later worked at Swiss investment bank Credit Suisse. After being established in 2012, Three Arrows Capital focused on foreign exchange derivatives arbitrage until it was discontinued by banks in 2017, after which the fund shifted its focus to the cryptocurrency market.
At the end of 2020, Three Arrows Capital owned nearly 39 million units of Grayscale Bitcoin Trust (GBTC), an investment product launched by a subsidiary of Digital Currency Group. In 2022, it had a net worth of $18 billion, $10 billion in cryptocurrency assets, and nearly $200 million in LUNA (now LUNC) tokens before it collapsed in May 2022.
Since June 2022, a series of negative news about Three Arrows Capital has been continuously reported. Three Arrows Capital was recalled for failing to meet margin calls and repay debts to cryptocurrency broker Voyager Digital, which declared bankruptcy in July 2022. On June 27, 2022, Three Arrows Capital was ordered to be liquidated by a court in the British Virgin Islands. However, Davies and Su Zhu were reportedly uncooperative during the liquidation process and have been missing since July 8, 2022, leaving 27 creditors with debts totaling $3.5 billion.
Significant risks from $3.5 billion in outstanding debt could be passed on to Three Arrows' creditors, such as Blockchain.com, Voyager Digital and Genesis. It is reported that $2.36 billion of the total debt is owed to Genesis, a subsidiary of Digital Currency Group, which also suffered a huge blow in the collapse of FTX.
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