The co-founders of Three Arrows Capital (3AC), a once celebrated crypto hedge fund giant, find themselves in legal trouble after a British Virgin Islands court issued a freezing order of over $1.14 billion in assets belonging to Su Zhu, Kyle Davies, and Kelly Chen. This move comes as a response to claims by liquidator Teneo that the founders played a role in 3AC’s financial deterioration.

3AC, headquartered in Singapore, collapsed in 2022 due to ill-fated investments and the broader market crash triggered by the collapse of Terra LUNA. Failing to meet margin calls from lenders, 3AC filed for bankruptcy in the British Virgin Islands. Teneo, overseeing the closure process, estimates the debt owed to creditors at approximately $3.3 billion and accuses the founders of non-cooperation, complicating the liquidation.

The British Virgin Islands court’s freezing order is not an isolated incident. Singaporean authorities had previously imposed a domestic freezing order, leading to Su Zhu’s arrest in September. The Singapore Court’s involvement, with a domestic freezing order and subsequent legal actions, further emphasizes the severity of the situation.

The consequences for 3AC’s founders are severe. They now face prison, regulatory bans, and damaged reputations. The British Virgin Islands court order prohibits them from transferring or selling the assets totalling $1.14 billion.