The scandal surrounding the cryptocurrency fund Three Arrows Capital is gaining momentum. Published court documents showed that 3AC owed over $3.5 billion to various companies. The cherry on the cake was the suspected embezzlement of client assets, which may have gone toward the purchase of a $50 million yacht.
Three Arrows Capital’s Billion Dollar Appetites
According to the 1,157-page document, the hedge fund founders received money from 27 different cryptocurrencies. The first thing that catches the eye is the outstanding commitments on two loan agreements signed with Genesis. It turns out that 3AC received a $2.36 billion loan, but was only able to repay part of the debt.
As collateral, Soo Joo and Kyle Davis’ company provided three stakes in the well-known Grayscale Bitcoin Trust. This also included shares of Grayscale Ethereum Trust, AVAX, Avalanche and other assets.
Other lenders to the company include:
- Celsius Network;
- Moonbase One;
- DRB Panorama;
- SBI Crypto;
- Ashla International Inc;
- Tower Square Capital and others.
The $3.5 billion is probably far from the final numbers. Representatives of the 3AC liquidation consulting firm Teneo keep releasing new figures. And each time they shock creditors.
A $50 million yacht on someone else’s money?
Another factor adds zest to this scandal. Court documents show that the founders of Three Arrows Capital were going to buy a yacht on the borrowers’ money. The ship was to be delivered from Italy, and the entrepreneurs paid an initial installment of $ 5 million.
After the delivery of an expensive toy to the owners, Su Zhu and Davis were to give the seller the remaining $45 million. Experts believe that the yacht was planned to be paid for with the money of the clients. However, the management of 3AC was not able to get a ride on the “luxury bathyscaphe”. The cryptocurrency crisis intervened and all hopes for a ride in the breeze ruined.
As a reminder, we previously wrote that hedge fund co-founder Su Zhu filed a lawsuit against his firm. The bankrupt businessman is seeking $5 million from Three Arrows Capital.