Three Arrows Capital (3AC) co-founder Su Zhu and the wife of co-founder Kyle Davies are both among creditors that lent money to the collapsed hedge fund.
Zhu lent the firm just over $5 million according to an affidavit submitted by Davies to the Eastern Caribbean Supreme Court in the Virgin Islands. Davies’ wife Kelli Kali Chen lent $65.7 million to 3AC, according to the same affidavit and a letter by Chen supporting the liquidation of 3AC.
Davies noted that, as an investor in 3AC, Zhu owned shares that, on December 31, 2021, were worth $1.4 billion. Due to the crypto market crash, this position was largely wiped out, he said.
“Investors, like Mr Zhu, have suffered immense losses in TACL,” said Davies, referring to 3AC.
An affidavit by Deribit further claims that, according to on-chain data of wallets believed to be associated with the company, $31.6 million was sent to an address owned by Tai Ping Shan Limited. Deribit said that the company is based in the Cayman Islands and owned indirectly by Zhu and Chen, and that it could not find where the funds went beyond this.
An organization chart among the documents appears to show that Chen, alongside Zhu, owns a significant portion of Tai Ping Shan (TPS). This is the company commonly believed to be 3AC's OTC trading arm. TPS made a statement on July 7 that it is a separate entity from 3AC and while it acknowledged that Zhu and Davies had an "indirect equity interest" in TPS, it said they did not have any direct control over its operations.
These details were revealed in a 1,157-page legal document uploaded online Monday by Teneo, the firm appointed last month to oversee 3AC's liquidation. The document — which The Block obtained before it became public — outlines claims against 3AC, which filed for Chapter 15 bankruptcy in New York a few days after a court in the British Virgin Islands appointed Teneo as liquidator.
The documents showed that 3AC owed $3.5 billion to various crypto companies. The largest loan — which was partially collateralized — was for $2.4 billion to Genesis Trading, a tab that has now been picked up by parent company Digital Currency Group.
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