Crypto hedge fund Three Arrows has filed for bankruptcy

Crypto hedge fund Three Arrows has filed for bankruptcy

Three Arrows Capital has filed for Chapter 15 bankruptcy in New York, days after the embattled crypto hedge fund began winding down in the British Virgin Islands.

Liquidation and the subsequent filing of bankruptcy come in the teeth of the inexorable crypto a market crash that engulfed lenders, stock markets and investors. Popular crypto tokens such as bitcoin and ether have fallen roughly 70 percent since posting all-time highs during last year’s stock market.

The consulting house Teneo has been appointed as joint liquidator hedge fundwith directors Russell Crumpler and Christopher Farmer appointed to oversee the liquidation.

Also this week, the Monetary Authority of Singapore reprimanded Three arrows for providing false information and breaking assets below the management threshold. The fund was first managed in Singapore before moving to the BVI in September.

Singapore’s financial services regulator added that it was “assessing whether Three Arrows Capital breached MAS regulations”.

According to court documents seen by the Financial Times, Deribit claimed that Three Arrows did not return $80 million because financial problems plagued the hedge fund.

The $80 million consisted of 1,300 bitcoins and 15,000 ether, which was valued at around $42 million. The loan also consisted of a negative property value of $37.1 million.

Deribit said that “the company is not or is likely to become unable to pay its debts as they fall due and is therefore insolvent”.

In documents filed in New York federal bankruptcy court, Three Arrows said “[b]y filing a petition to initiate this Chapter 15 case, foreign representatives [Teneo] seek to remain active in the efforts of individual creditors to seize assets and to preserve the status quo and give opportunity to foreign representatives [to] stabilize the debtor’s assets, preserve the debtor’s assets and conduct a full investigation
debtor, claims against his estate and his property, including grounds of action”.

Crypto financial services groups BlockFi and Genesis also liquidated some of Three Arrows’ positions last month after it was unable to meet margin calls.

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