3AC liquidators seek $1.3 billion from Zhu, Davies: Bloomberg

Liquidators of Three Arrows Capital aim to recover $1.3 billion from the failed crypto hedge fund’s co-founders, Su Zhu and Kyle Davies.

The liquidators, two partners at the consultancy firm Teneo, allege that Zhu and Davies were responsible for losses equal to that sum — after racking up leverage in the months immediately prior to 3AC’s collapse, according to a Bloomberg report published today that cited an anonymous source. Teneo and 3AC did not immediately respond to requests for comment.

The allegations were reportedly discussed during a meeting with 3AC’s creditors on Tuesday. The Block was first to reveal, in July last year, that 3AC owed its creditors more than $3.5 billion when it collapsed.

3AC accused of taking on 'significant leverage' 

Both Zhu and Davies went quiet in the weeks following their fund’s implosion, but gradually made a return first to social media and later to entrepreneurship.

The pair teamed up with Mark Lamb, founder of CoinFLEX, the crypto lender that filed for restructuring in the Seychelles last year, to launch a new business named OPNX. Among other things, it aims to allow users to trade bankruptcy claims. 3AC's liquidators, meanwhile, have repeatedly complained about Zhu and Davies' lack of cooperation. 

According to Bloomberg’s report, 3AC’s liquidators accuse Zhu and Davies of taking on “significant leverage” between May and June 2022, after the fund had taken a major hit from bets on luna tokens and other crypto investments. At that point, liquidators believe 3AC was already insolvent, the report states, adding that liquidators are now taking action against the pair in a British Virgin Islands court to recover those losses.