S’pore-based Three Arrows Capital fails to pay debts – now under liquidation due to insolvency

Co-founded 10 years ago by former Credit Suisse traders Zhu Su and Kyle Davies, Singapore-based cryptocurrency hedge fund Three Arrows Capital has since been ordered into liquidation by a court in the British Virgin Islands. 

Teneo has been appointed as “joint liquidators” of Three Arrows Capital through the court order. According to the Straits Times, the Commercial Court there orders a company to be liquidated if it is regarded as insolvent because it cannot pay its debts, though the sum of debts was not disclosed.

Earlier this week, crypto broker Voyager Digital issued a notice of default to Three Arrows Capital, after the fund failed to make the required payments on a loan worth more than US$665 million.

Several creditors have already begun to liquidate positions opened by Three Arrows Capital, including US-based crypto lender BlockFi and Genesis.

A string of crypto companies

This liquidation of Three Arrows Capital is the latest in a string of high-profile crypto companies collapsing, after Terraform Labs and Celsius, as the general downturn in the crypto economy worsens.

Hints that not all was well at Three Arrows Capital began several weeks ago, when Zhu tweeted that the company was “in the process of communicating with relevant parties and fully committed to working this out”, without specifying any particular issue. 

The company later confirmed that it had suffered heavy losses. The fund had over US$3 billion worth of cryptocurrencies under management, and was exploring options including asset sales and a bailout. They were also under pressure from creditors including BitMEX.

According to co-founder Davies, Three Arrows Capital had invested over US$200 million in LUNA tokens, and this took a heavy hit when the value of LUNA tokens collapsed in May.

Aside from this, the fund was also known for holding a large quantity of Grayscale Bitcoin Trust, as well as staked ether tokens, both of which have seen their values decline sharply.

Zhu had previously argued that the value of cryptocurrencies would continue to rise in his “supercycle” thesis, and the company has become known for its bullish trades and excesses.

Zhu himself is a billionaire, and had previously been granted an option to buy a Good Class Bungalow (GCB) in Singapore’s Bukit Timah area for S$48.8 million in December last year.

Featured Image Credit: CryptoShrypto