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Foreign media: Three Arrows Capital liquidator pursues $1.3 billion from co-founders Su Zhu and Kyle Davies

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Foreign media: Three Arrows Capital liquidator pursues $1.3 billion from co-founders Su Zhu and Kyle Davies

Foreign media Bloomberg and Reuters both cited sources familiar with the matter, reporting that liquidators for the bankrupt hedge fund Three Arrows Capital 3AC are seeking $1.3 billion from the fund's two co-founders. They believe that the two individuals took on excessive leverage before the fund's bankruptcy, resulting in significant losses beyond the fund's capacity to bear.

Co-Founders of Three Arrows Capital Pursued for $1.3 Billion

According to sources, the liquidators, who are partners at consulting firm Teneo, decided to press charges against the two co-founders, Su Zhu and Kyle Davies, after discussions with 3AC creditors. The case has been filed in the British Virgin Islands court.

The reason behind this legal action is that the two individuals engaged in highly leveraged trading with Luna tokens and other investments between May and June 2022, resulting in significant losses for the fund.

According to CoinDesk, a spokesperson for Teneo confirmed the lawsuit but declined to provide further comments. Su Zhu and Kyle Davies could not be reached for comment.

Three Arrows Capital: A Catalyst for the Bear Market

While Terra's collapse marked the beginning of the bear market in 2022, the subsequent bankruptcies of 3AC and its associated firms Voyager, Celsius, and Genesis followed. What's even more surprising is that Su Zhu and Kyle Davies re-emerged in the crypto space shortly after and launched a debt trading platform, seemingly establishing a new venture fund under the name 3AC:

  • April 4, 2023: Founders of 3AC launch new bankruptcy debt trading platform "OPNX"! Expected to trade debts of FTX, 3AC, Mt. Gox, and others

  • April 21, 2023: OPNX claims investment from institutions like AppWorks, which were denied

  • June 1, 2023: OPNX introduces governance platform and new platform token "OX"

  • June 21, 2023: OPNX announces latest partner "Three Arrows Venture 3AC Ventures"

These developments seem to suggest that Three Arrows Capital's bankruptcy and the actions of Su Zhu and Kyle Davies are unrelated. The news of the liquidators seeking funds coincidentally emerged about a week after the launch of 3AC Ventures.