Legal Freeze: Three Arrows Capital Founders Face Asset Restriction of $1 Billion

A significant development has unfolded in the ongoing legal drama surrounding the creators of the now-defunct cryptocurrency hedge fund, Three Arrows Capital (3AC). A British Virgin Islands court has made a decisive move by freezing assets totaling over $1 billion, which are linked to Su Zhu, Kyle Davies, and Davies' spouse, Kelly Chen. This information has been disclosed by Teneo Restructuring, the firm responsible for handling 3AC's liquidation.

The issuance of a global court order, which occurred on a Monday, is a direct response to the financial turmoil experienced by 3AC. The fund initiated Chapter 15 bankruptcy proceedings in July of the preceding year, with its collapse being triggered by the demise of the stablecoin issuer Terra, resulting in insurmountable losses. This recent development is part of the ongoing initiatives led by Teneo to recuperate funds and address the substantial claims made by creditors, exceeding the staggering amount of $3 billion.

Su Zhu, one of the founders, encountered legal challenges earlier in Singapore, where he underwent a four-month incarceration starting in September. The allegations against Zhu were related to his purported failure to assist in the winding-up process of 3AC. His release this month is anticipated, attributed to exemplary behavior during his period of confinement.

Functioning as the liquidators for 3AC, Teneo Restructuring has been actively engaged in the pursuit of fund recovery, seeking a substantial sum of $1.3 billion. In a strategic move to optimize returns for creditors, Teneo has encompassed Kelly Chen, the spouse of Kyle Davies, within the purview of the court order. The objective is to exhaust all available channels to prevent the founders and Chen from disposing of assets or participating in activities that could impede the eventual actions taken by the liquidators.

In a released statement, Teneo emphasized the intricacies of the court order's design, aiming to thwart any potential efforts by the founders and Kelly Chen to manipulate or divest assets in a manner that could hinder the liquidators' endeavors. This calculated maneuver underscores the intricate and global nature of the ongoing legal proceedings.

Adding a layer of complexity to the legal proceedings, a Singapore court has taken parallel action by imposing a domestic freezing order on assets located within its jurisdiction. This additional measure further highlights the widespread repercussions of 3AC's financial collapse and the subsequent endeavors to navigate the aftermath on an international scale.

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