Bankrupt Crypto Hedge Fund Three Arrows Capital Probed by SEC, CFTC for Possible Legal Violations – Bitcoin News

Three Arrows Capital, a crypto-hedge fund that has gone bankrupt is in trouble according to reports. The whereabouts of the hedge fund’s co-founders Su Zhu and Kyle Davis are still unknown and the court-appointed liquidator plans to leverage unorthodox means to send the two co-founders a subpoena.

3AC Under Investigation by US Regulatory Monitors

According to Bloomberg, anonymous sources claim that the U.S. authorities are investigating Three Arrows Capital’s co-founders. The Bloomberg report says that while creditors claim 3AC owes them billions, the SEC and CFTC are probing “a range of possible legal violations.”

3AC was a key point following the huge losses suffered by the Terra implosion, UST depegging and Terra implosion. Reports in June noted that the fund had become insolvent.

Accounts had noted that 3AC owed the now-bankrupt Voyager Digital $655 million and a British Virgin Islands court issued an order that attempted to seize the fund’s assets for a formal liquidation process.

3AC filed Chapter 15 bankruptcy protection during the first week in July. By the end of the month the co-founders Su Zhu, Kyle Davis, and their first public statements about 3AC’s problems were made. While speaking about the situation and noting that the whole thing was “regrettable,” the duo’s whereabouts were still unknown.

Bloomberg contributors Allyson Versprille, Lydia Beyoud, and Olga Kharif claim that anonymous sources say U.S. regulators are investigating 3AC for not registering with the SEC or CFTC and the problems with the company’s balance sheet.

Cour-Appointed Bankruptcy Lawyer Aims to Subpoena 3AC Founders via Twitter & Email

Another report states that 3AC held approximately $10 billion of assets under management (AUM), last March, before Terra’s implosion. Bloomberg’s Jeremy Hill explained on Monday, that the court-appointed liquidator from the 3AC bankruptcy case is looking to subpoena Zhu and Davis via Twitter and email.

Teneo’s attorneys, who were appointed by the court as liquidator, tried to use the subpoena method and failed to locate Zhu or Davis. Hill’s report says Davis kept crypto account credentials stored in a safety deposit box but the liquidator Teneo has detailed that both co-founders have provided “meager” information. News last week reported that the liquidator moved over 300 non-fungible blue-chip tokens (NFTs), tied to the defunct crypto hedge funds. Teneo confiscated the NFTs, which are now kept in a safe Gnosis account.

“All Starry Night Capital NFTs, of which VVD is aware, have been accounted for and are in our possession or are being transferred to us,” Teneo reported after the NFTs were transferred.

This story contains tags
3AC, 3AC bankruptcy, 3AC co-founders. Balance Sheet. Bankruptcy. Chapter 15 Chapter 15 protection. Crypto hedge fund. Investigation. Kyle Davis. Starry Night Capital. Su Zhu. Su Zhu. Kyle Davis. Teneo. Terra. Terra Implosion. Three Arrows Capital. Voyager Digital.

Do you have any thoughts on the probe into Three Arrows Capital? What about the liquidator who attempted to subpoena co-founders by email and tweeting? Please share your views on this topic in the comment section.

Jamie Redman

Jamie Redman is the News Lead for News. He also lives in Florida and works as a journalist covering financial technology. Redman is an active participant in the cryptocurrency community from 2011. Redman is passionate about Bitcoin and open-source codes. Redman has contributed more than 6000 articles to News since September 2015. These articles are about disruptive protocols that are emerging.

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