A British Virgin Islands court ordered the liquidation of Three Arrows Capital, a hedge fund that bet big on everything from Bitcoin to the ill-fated Luna token, and then succumbed to a $2 trillion wipeout of the digital-asset markets.
The court, which made an order on Monday, has appointed two partners at consulting and advisory firm Teneo to handle the liquidation, according to a person familiar with the matter, who hasn't been identified because the information is confidential.
The person said that Teneo will oversee talks with potential buyers that may be interested in Three Arrows'remaining holdings, such as tokens or equity stakes in cryptocurrencies startups. A website will be set up to find creditors and determine who is owed what. Three Arrows invested in a number of centralized finance platforms, such as Aave and dYdX, as well as StarkWare, according to its website. It is not immediately clear what or how many of these holdings will be subject to a sale.
The court order brought down one of the most famous hedge funds founded by Zhu Su and Kyle Davies, former Credit Suisse traders, at the kitchen table of their apartment in 2012. Three Arrows assets under management were estimated to be around $10 billion in March, according to Nansen, a company that had a bull run in the criptocurrency market. In April, Zhu said the fund plans to move its headquarters from Singapore to Dubai.
Three Arrows have become a symbol of the industry's excesses during the bull run last year when firms built up the leverage that hobbled them as the market turned. A cryptic tweet from Zhu hinted at Three Arrows'reversal of fortune and growing plight, setting off a market spasm.
The fund's liquidity crunch was one of a series of crises that have rippled through the battered sector during this year s downturn, including the implosion of the TerraUSD stable coin and liquidity issues at lenders Celsius Network and Babel Finance. Three Arrows's troubles have hit firms such as Voyager Digital Ltd., which issued a notice of default to Three Arrows after failing to pay back a loan worth $675 million. One of their large counterparties, BlockFi and the prime brokerage Genesis, said they had to liquidate one of their large counterparties, without naming the counterparty.
Three Arrows Fund is incorporated in the British Virgin Islands. The Commercial Court orders a company to be liquidated if it is regarded as insolvent because it can't pay its debts. Companies can also voluntarily liquidate, though that is less common.
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