Crypto hedge fund Three Arrows Capital (3AC) filed for Chapter 15 bankruptcy in a federal bankruptcy court in the Southern District of New York on Friday, in hopes to shield its U.S. assets after a court in the British Virgin Islands reportedly ordered the firm into liquidation last week.
See related article: Three Arrows Capital lines up for liquidation
- Chapter 15 legally protects U.S. assets of insolvent foreign debtors from creditors in the U.S.
- A British Virgin Islands court reportedly ordered the liquidation after Singapore-founded 3AC defaulted on a US$670 million loan from digital asset brokerage Voyager Digital last Monday.
- The Monetary Authority of Singapore (MAS) reprimanded 3AC on Thursday for misleading information and exceeding assets under management limits.
- 3AC’s woes began to surface in May’s Terra crash, after buying US$200 million worth of LUNA tokens for Luna Foundation Guard’s US$1 billion raise in February, cofounder Kyle Davies told the Wall Street Journal.
- There are concerns of a broader contagion in the sector as many firms, including BlockFi, had loans to 3AC.
See related article: MAS takes aim at Three Arrows Capital, does not impose penalty