Blockchain.com cooperating with investigations into Three Arrows

NEW YORK (BLOOMBERG) – Blockchain.com, a creditor of Three Arrows Capital, said it was cooperating with ongoing investigations into the troubled crypto hedge fund.

Blockchain.com and Deribit, a crypto derivatives exchange, confirmed that they were among creditors that sought for the liquidation of Three Arrows at a court in the British Virgin Islands, according to a court filing and representatives from the two companies.

The court made the liquidation order on Monday (June 27) and has appointed two partners at consulting and advisory firm Teneo to handle the process, a person familiar with the matter told Bloomberg News.

“We believe Three Arrows Capital defrauded the crypto industry and intend to hold them accountable to the fullest extent of the law,” a spokesman for Blockchain.com said in an e-mailed statement. “We have filed for the immediate liquidation of all global assets of Three Arrows.”

Three Arrows was reprimanded on Thursday by the Monetary Authority of Singapore for providing false information and exceeding the maximum amount of money it was allowed to manage. The central bank said in a statement that it had been investigating these actions since June 2021.

The liquidation order brings down the curtain on one of crypto’s most famous hedge funds, founded in 2012 by former Credit Suisse traders Zhu Su and Kyle Davies.

Three Arrows’ assets under management were estimated to be about US$10 billion (S$13.9 billion) in March, according to blockchain analytics firm Nansen. Mr Davies told the Wall Street Journal (WSJ) earlier this month that it had roughly US$3 billion in assets under management in April before crypto markets crashed.

Mr Nichol Yeo, a partner at law firm Solitaire LLP, told WSJ that Three Arrows was considering options as it sought legal advice in the British Virgin Islands. Mr Yeo did not respond to a request for comment from Bloomberg News.

Blockchain.com, a London-based crypto wallet provider and exchange valued at US$14 billion in March, said it remained liquid and solvent with a strong financial position, and customers would not be affected.

Deribit, whose parent company counts Three Arrows as a shareholder, has said on Twitter it remains financially healthy despite having a net debt that it considered potentially distressed. Three Arrows’ woes have hit firms such as crypto broker Voyager Digital, which has issued a notice of default to the fund.