Three Arrows liquidators get Singapore court nod to probe crypto fund

Three Arrows collapsed after the implosion of the Terra stablecoin project sent cryptocurrencies tumbling. PHOTO: REUTERS

SINGAPORE (BLOOMBERG) - Three Arrows Capital's liquidators secured a key court decision in Singapore that may give them greater insight into the collapsed crypto hedge fund's remaining assets in a major jurisdiction, people with knowledge of the matter said.

The Singapore High Court on Monday (Aug 22) granted a petition by advisory firm Teneo, which in June was appointed by a British Virgin Islands (BVI) court to liquidate Three Arrows, to recognise the liquidation order in the country, the people said, asking not to be named as the proceedings were private. Teneo is trying to round up and preserve the hedge fund's assets.

Recognition in Singapore gives the liquidators authority to request access to any financial records the fund kept locally, the people said. They lacked the legal basis to do so before gaining formal recognition by a local court, according to the people.

The liquidators plan to focus on establishing what assets held in Singapore - such as bank accounts, properties, cryptocurrencies, non-fungible tokens and stakes in companies - can be tied to Three Arrows itself, they said.

Three Arrows, which operated from Singapore until at least early May, collapsed after the implosion of the Terra stablecoin project that month sent cryptocurrencies tumbling.

Co-founder Zhu Su, whose family has two luxury homes in Singapore, had announced plans to move its headquarters to Dubai in April. The fund was registered in the BVI.

Claims

The liquidators have gained control of at least US$40 million (S$55.8 million) of Three Arrows' assets, a fraction of the amount creditors say they are owed, according to July filings. Creditors have filed paperwork indicating they are owed more than US$2.8 billion in unsecured claims, a figure expected to rise significantly, court papers show.

WongPartnership is representing Teneo in Singapore, while Solitaire is working with Three Arrows' local entity here. Representatives for Teneo, WongPartnership and Solitaire declined to comment. Mr Zhu and co-founder Kyle Davies did not immediately respond to requests for comment.

The Singapore court ruling follows Three Arrows' filing for so-called Chapter 15 bankruptcy in the US in July. Shortly after that filing, lawyers for Teneo said in court papers that Mr Zhu and Mr Davies had not been cooperating on the process. At around the same time, Mr Zhu posted on his Twitter account that the founders had provided a spreadsheet of the fund's assets to the liquidators.

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