3AC Liquidators raised $1.4 billion from founders

An estimated $1.4 billion worth of assets — digital and otherwise — have been frozen by Teneo, the firm that oversees the clearing of crypto hedge fund Three Arrows Capital.

The freeze prevents 3AC founders Su Zhu and Kyle Davis, along with Davis' wife Kelly Chen, from receiving the money in question.

“The global freezing order was sought in relation to ongoing claims by the liquidators, including that the founders should be held liable for the impairment of the 3AC site to an extent commensurate with its value. Freeze orders are required,” Teneo told Decrypt in a statement.

Teneo is overseeing the liquidation of 3AC's assets in an effort to pay off $3.5 billion to creditors. Three Arrows Capital is slated for release in June 2022. It was a long and “intense effort” to get Zhu and Davis to collaborate, Teneo said.

The law firm's co-founders have repeatedly asked the judge to cooperate, saying they are “withholding information.” The co-founders were pursued by US authorities. In August, Davis announced that he had renounced his US citizenship when he became a resident of Singapore in 2017 – and no longer had to answer to US courts.

The company requested roughly the same amount from its founder in June. A source familiar with the matter told Bloomberg at the time that Teneo had met with 3AC lenders and its co-founders in 2015. In May and June 2022, the company was made aware of allegations that they continued to exploit the founders despite being “already a plaintiff”.

Teneo was able to secure some company assets, including $35.6 million in cash, a $30 million yacht, and some NFTs. But the value of those assets pales in comparison to the $3.5 billion that Three Arrows lost in capital.

Overexposure to tera

In an interview last year, Zhu and Davis said that they themselves bet big on TerraUSD and are close to Terra. Founder Dr. Kwon.

Before his capture, Khun was found guilty of fleeing to Montenegro and attempting to leave the country on a false passport. He is now fighting extradition to face charges in the US.

Zhou and Davis remained silent, saying they received death threats shortly after the collapse of 3AC. But since then, traders have launched a new exchange-OPNX to transfer bankruptcy claims to other crypto companies like FTX.

Three Arrows Capital Fall of Terra and Three Arrows Capital By 2022, it has resulted in widespread market penetration throughout the crypto industry. Overexposure to hedge funds has led to the collapse of crypto lending firms BlockFi, Voyager, and Celsus—among other crypto startups. In turn, it caused further damage to the market. Before long, market participants, as well as regulators and law enforcement officials, began pointing the finger at Zhou, Davis and Kwon.

Blockchain, Voyager, and Celsius have all since returned to customers or filed for bankruptcy in the courts—but all are still trying to repay the debt owed to them by 3AC.

Edited by Guillermo Jimenez.