Three Arrows Capital has filed for bankruptcy in New York. The reason is clear: the hedge fund can no longer pay their clients. There is a lack of liquidity. The combination of falling prices and questionable business models is causing the collapse of the company that was founded in 2012.
Three Arrows Capital was previously declared bankrupt by a court in the British Virgin Islands. The regulators in Singapore are also suing the company. The fund is said to have shared false information and exceeded the limit for assets under management.
It concerns a ‘chapter 15 case’. According to Bloomberg, that is a bankruptcy protecting US assets. So it could partly help to give creditors their money. That can be a process of years.
Industry
Three Arrows Capital is involved in numerous deals in the industry. In addition to the average customers, the victims in this story are also companies that have lent money to the fund.
Two parties that have/had financial ties with Three Arrows Capital are Deribit and BlockchainCom. They were two of the parties pushing for bankruptcy in a lawsuit.
BlockchainCom explains their motivations in a statement: “We believe that Three Arrows Capital has defrauded the crypto industry and intend to hold them accountable. We have requested the immediate liquidation of all of Three Arrows’ global assets.” †
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