Crypto hedge fund Three Arrows files for US bankruptcy

Crypto hedge fund Three Arrows Capital has filed for Chapter 15 bankruptcy, according to a court filing filed in the Southern District of New York on Friday.

Three Arrows Capital is one of the biggest victims of the recent so-called “crypto winter”. The digital asset ecosystem has been hit by both a broad market sell-off triggered by Federal Reserve rate hikes and concerns about individual crypto coins and companies. bitcoin BTCUSD,

Dollar value is down more than a third this month.

The Chapter 15 bankruptcy filing in Manhattan federal court late Friday came just days after Three Arrows was liquidated in the British Virgin Islands after allegations it failed to pay $80 million it owed to digital asset exchange Deribit , reported the Financial Times.

Three Arrows Capital operated as a regulated fund manager in Singapore until last year, when it moved its headquarters to the British Virgin Islands, part of a plan to move its operations to Dubai.

The fund, founded by former Credit Suisse traders Zhu Su and Kyle Davies, had assets under management of an estimated $10 billion as of March, according to blockchain analytics firm Nansen, Bloomberg reported.

The law firm Latham & Watkins is representing Three Arrows in the US bankruptcy. The case is Three Arrows Capital Ltd and Russell Crumpler, 22-10920, US Bankruptcy Court for the Southern District of New York (Manhattan).

Bankruptcy specialists at Teneo, the British Virgin Islands consulting firm hired to liquidate Three Arrows, told the US court that a “significant number of creditors” are expected to make claims against the hedge fund, the Financial Times reported.

In a sign of the extent of Three Arrows’ borrowing, Toronto-listed crypto lender Voyager Digital said in late June that it could lose more than $650 million in loans it had to cryptocurrency firm co-founded by Su Zhu and Kyle Davies. investment company had awarded.

Voyager said late Friday that it was suspending payouts and trading on its platform while it explored “strategic alternatives.”

See: Crypto brokerage Voyager Digital shares fall as much as 40% after suspending trading, deposits and withdrawals

BlockFi, another major crypto lender, said on Friday that it suffered around $80 million in losses due to the collapse of Three Arrows, even after liquidating some of its positions.

BlockFi also announced a deal on Friday in which FTX will provide new funding in exchange for an option that would allow the crypto exchange to buy the group for up to $240 million.

See also: FTX signs deal to bail out crypto lender BlockFi with option to buy for up to $240 million

Three Arrows is also facing regulatory scrutiny in Singapore. Singapore’s Monetary Authority this week rebuked the group for providing false information and exceeding a threshold for assets under management. Authorities in Singapore said they had been investigating Three Arrows for a year.

Read: Bitcoin records the worst first half of the year in history. Here’s what to watch in crypto in the second half.