Three Arrows Capital seeks Chapter 15 bankruptcy protection in the United States

The hedge fund Three Arrows Capital (3AC) has filed for Chapter 15 bankruptcy protection in a New York court, according to Bloomberg.

The provision could shield 3AC from asset seizure in the United States during liquidation in the British Virgin Islands.

Three Arrows Capital filed the documents after объявления by Voyager Digital that trading and withdrawals would be halted from 1 July 21:00 (Kyiv/Moscow time).

“This was an extremely difficult decision, but we believe it to be the right move in the current market conditions. It will give us additional time to explore strategic alternatives,” said Voyager CEO Stephen Ehrlich.

On June 27, Voyager Digital sent 3AC a notice of default for failure to meet the loan obligations due to nonpayment of the loan. The crypto broker extended a loan of 15,250 BTC (about $294 million at the time of writing) and 350 million USDC.

On June 24, Voyager Digital asked to settle part of the debt—25 million USDC—and then demanded repayment of the entire loan in BTC and stablecoins by June 27.

On June 23, the crypto broker reduced its daily withdrawal limit from $25,000 to $10,000 amid issues with 3AC. To protect client assets, the company arranged with Alameda Research of Sam Bankman-Fried a loan of $200 million USDC and opened a revolving credit line of 15,000 BTC.

According to Nansen, Three Arrows Capital, founded by Su Zhu and Kyle Davies in 2012, managed assets of around $10 billion. Against the backdrop of crypto market rout and Terra crash, reports of 3AC insolvency emerged.

Earlier, 8 Blocks Capital accused the hedge fund of using client funds to cover margin calls.

According to some reports, crypto platforms BitMEX, FTX and Deribit liquidated 3AC’s positions due to the latter’s failure to meet margin requirements.

The Monetary Authority of Singapore, where the hedge fund’s headquarters are registered, issued Three Arrows Capital a reprimand for providing false information and exceeding the permitted assets under management threshold.

The exchange and wallet provider Blockchain.com and the Deribit platform called for the liquidation of 3AC.

Read ForkLog’s Bitcoin news in our Telegram — cryptocurrency news, rates and analytics.