Three Arrows Capital Owes $3.5 Billion to 27 Companies 

Three Arrows Capital, also known as 3AC, happens to be in more trouble than we thought. The bankruptcy filings reveal that the company is owing about 27 companies. The filing also reveals that the founders paid $50 million for a yacht. To top up the chaos, its founders have been reported missing.

Borrowed funds were used to purchase the yacht

The troubled crypto hedge fund is described in detail in a 1,157-page document written by liquidator Russell Crumpler and released by Three Arrows Capital (3AC) restructuring company, Teneo.

According to the document, Su Zhu and Kyle Davies, co-founders, put money down on a yacht valued at $50 million. According to one affidavit submitted by Blockchain.com, which purportedly lent $270 million to the crypto hedge fund, the yacht was supposed to be delivered in Italy some time within the next two months, at which point the full payment would be required.

Su Zhu and Kyle Davies, co-founders, put money down on a yacht valued at $50 million. It was reportedly designed to be “bigger than any yacht owned by Singapore’s wealthiest billionaires,” according to Davies.

The co-founders are suspected of utilizing borrowed money to make the payment while evading contact from creditors. The report also reveals that Zhu and his wife recently spent between $28.5 million and $48.8 million on two Singapore “good-class” bungalows, or upscale dwellings. These assets were offered as proof that the co-founders might have been buying things for themselves with business funds.

The liquidators stated in their letter that “the founders of the manifestly insolvent company should not be permitted to deal with what may be assets of the company.”

Additionally, liquidators claim that 3AC kept trading cryptocurrency despite margin calls from lenders. Separately, the fund is thought to have transferred $900,000 in USDT and $31 million in stablecoin USDC on June 14 to Tai Ping Shan Limited, a Cayman Islands-based business owned by Zhu and Kyle Davies’ partner Kelly Kaili Chen.

Celsius lent $75 million to 3AC

According to court documents, 3AC received two loans of $50 million and $25 million from Celsius in the stablecoin USDC. It is now clear that the 3AC, Celsius, and Terra-Luna crashes were all connected as a result of a domino effect. 

The Terra-Luna scandal caused 3AC to collapse, which further contributed to a sharp decline in investor confidence. This, in turn, resulted in a remarkable increase in withdrawal requests on Celsius‘s platform, forcing the platform to temporarily halt withdrawals. The rest is history.