According to the latest filing in the court, the bankrupt crypto hedge fund, Three Arrows Capital (3AC) has $3.5 billion standing debt against 27 creditors including Blockchain.com, Voyager Digital, and Genesis Global Trading.
Among all the creditors’ debt, Genesis alone gave a $2.36 billion collateralized loan with a margin ratio of 80%.
3AC failed to repay loans and missed margin calls with lenders, which clearly implies that its investment accounts failed to maintain adequate levels and were not topped up again.
The details were unveiled after affidavits filed for bankruptcy on July 7, and went public on Monday via Teneo, the firm hired to oversee 3AC’s liquidation.
The filing that contains thousands of pages often states that “3AC is insolvent and should be wound up” in many different terms.
In another affidavit filed on June 26, Blockchain.com’s Chief Strategy Officer Charles McGarraugh unleashed the truth. He revealed that 3AC co-founder Kyle Davies told him on June 13 that Davies strived to borrow an additional 5,000 BTC from Genesis “to pay a margin call to another lender.”
The intended move from 3AC was similar to the Ponzi scheme, where scammers pay their earlier investors from new investors.
Also Read: Three Arrows Capital Holds First Meeting For Creditors On July 18
Also, the filing contains details of various real estate investments in the names of 3AC co-founder Su Zhu’s child and wife, such as two residences in Singapore worth $48.8 million and $28.5 million.
“At this stage, it is unclear how the assets of the Company were dealt with by its founders and whether the assets of the Company were used toward the purchases that they have been making,” an affidavit from liquidator Russell Crumpler, Senior Managing Director at Teneo, reads.
Crumpler also argued that “the founders of the clearly insolvent Company should not be allowed to deal with what may be assets of the Company.”
