Read the Full Three Arrows Capital Bankruptcy Filing

Kyle Davies Su Zhu — *Three Arrows Capital Co-Founders Kyle Davies and Su Zhu*

Three Arrows Capital held $3 billion in assets under management as recently as April, the company told a New York court in a Friday bankruptcy filing.

“The debtor is an investment firm incorporated in the British Virgin Islands with a focus on trading cryptocurrency and other digital assets that was reported to have over $3 billion of assets under management as of April 2022,” attorneys for the company wrote in a Chapter 15 bankruptcy filing in the Southern District of New York. They explained the company “collapsed in the wake of extreme fluctuations in cryptocurrency markets.”

The company’s attorneys are based in the New York office of law firm Latham & Watkins.

3AC, founded by Zhu Su and Kyle Davies in 2012, held more than three times that amount in March, according to blockchain analytics firm Nansen, when it was managing $10 billion. A Virgin Islands court ordered it into bankruptcy on June 24 at the request of one of its creditors, Deribit, after it lost money in failed bets on the market. Court filings showed the company borrowed around 1,300 bitcoin and 15,000 Ethereum from Deribit in March 2020, valued at roughly $40 million as of Saturday.

The firm took several big participants in the crypto market with it as it spiraled toward insolvency in June. FTX Exchange, Deribit, BitMEX, and BlockFi were among the lenders who liquidated the company’s positions last month. And 8 Blocks Capital CEO Danny Yuan claimed amid the carnage that 3AC absconded with some of his company’s funds, writing in a June 14 tweet, “We trade in one of 3AC’s trading accounts. This morning they took about [$1 million] out of our accounts. I hope you pay us back asap.”

Companies with outstanding loans to 3AC include Voyager Digital — in the amount of 15,250 bitcoin and $350 million in stablecoins — as well as Finblox. Voyager announced this week that it was ending customer withdrawals for the foreseeable future. Finblox announced that it was imposing a daily withdrawal limit of $3,000. 3AC also reportedly still owes $6 million to BitMEX, and undisclosed amounts to Blockchain.com and Genesis Trading.

Attorneys said in Friday’s filing they couldn’t speak to the whereabouts of the company’s founders, writing, “The foreign representatives understand and believe that while the Debtor has had certain operations in Singapore, Mr. Davies and Mr. Zhu’s current location remains unknown. They are rumored to have left Singapore.”

They added that without the U.S. court’s intervention, a bank run in the Virgin Islands on 3AC’s surviving assets would be “destructive” to the process of repaying its creditors.

“Without the relief requested herein, creditors may pursue a value-destructive race to the courthouse to exercise rights in a manner that would enhance their own position vis-à-vis other similarly situated creditors,” they said. “Such a turn of events, would undermine the very purpose of the [Virgin Islands] proceeding: to establish an orderly, value-maximizing liquidation of the Debtor’s assets for the benefit of all creditors.”

The company is also facing trouble in Singapore. The country’s financial regulator said this week that it “reprimanded” 3AC for providing misleading information about relocating to the Virgin Islands in 2021.

You can read the full bankruptcy filing above.