Investors in the collapsed digital asset hedge fund Three Arrows Capital (3AC) inch closer to finding out what really happened to their funds after a Singaporean court granted the firm’s liquidators access to its local entities.
The Singapore High Court granted a petition by Teneo, the British Virgin Islands court-appointed liquidator for 3AC, in which it sought recognition in Singapore, reports Bloomberg, citing a source who requested anonymity.
With this recognition, Teneo can access any information from 3AC’s local entities. This will allow the liquidators to better probe what exactly went on behind the scenes at 3AC, a firm that was initially registered in Singapore before relocating to the British Virgin Islands last year.
For now, Teneo’s priority is establishing what assets the hedge fund held in the city-state, ranging from its bank accounts to its digital assets, Non-fungible tokens, and even companies it had invested in. This will give them a better grasp of how much the fund has in respect to what it owes its investors, such as the Digital Currency Group and the bankrupt lenders Voyager Digital and Celsius Network. Previous court filings pegged the amount 3AC owes at $2.8 billion, with experts expecting this figure to rise significantly as proceedings continue.
Teneo declined to comment on the latest development, with 3AC founders Su Zhu and Kyle Davies also remaining tightlipped.
“We are unable to comment on cases that are before the Courts,” a spokesperson for the Singaporean High Court stated.
3AC founder Zhu: Liquidators are misleading the court
Just after the Singaporean court gave the liquidators access to local entities and financial records, 3AC founder Su Zhu went to a court in Bangkok, Thailand, to deliver an affidavit, the first time he had been seen in person for months. The affidavit was aimed at the liquidators he believes are misrepresenting the facts and misleading the courts.
Teneo has accused 3AC founders of failing to cooperate, claiming they have provided “rather selective and piecemeal disclosures about the hedge fund’s assets.”
Zhu’s affidavit, which was seen by Bloomberg, denies the allegations and accuses Teneo of failing to provide “an entirely complete or accurate version of events.” The liquidators have furnished the Singaporean High Court with “inaccurate and misleading representations of the operations, relationships, and timelines associated with [their] entities.”
The affidavit further laid out the structure of 3AC and its various subsidiaries and their intricate relationships for the first time since its May collapse.
It all started with Three Arrows Capital Pte Ltd, a hedge fund that was registered in Singapore in 2013 and operated from the city-state until July 2021. This company had a number of feeder funds registered in the Islands and the United States.
Zhu claims that around September last year, the Singaporean entity, in which he is a director, ceased being the main company. A new entity in the Islands, known as ThreeAC Ltd, was opened and took over the hedge fund functions.
As such, liquidators should stop going after the Singaporean entity and its employees, presumably including himself as he’s the director, as they may not have the type of information being sought, Zhu’s affidavit says.
He worries that the employees could face imprisonment and hefty fines if they are found in contempt of the court.
Teneo was quick to file a response in Singapore, disputing the claims made by Zhu.
“The joint liquidators strongly disagree with the positions set out in Su Zhu’s affidavit,” Teneo stated. “[We] rely on full and immediate cooperation from relevant parties, including those situated in Singapore. We remain optimistic that such parties will provide access to complete records and all relevant information to enable us to discharge our responsibilities fully in the interests of the creditors of 3AC.”
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