Three Arrows Capital’s Crypto Assets Are in Transit – Here’s How the Millions Are Moving

Updated by Geraint Price
In Brief
  • Three Arrows Capital has moved millions worth of crypto assets to KuCoin.
  • The troubled firm moved the stablecoins after filing for Chapter 15 bankruptcy protection.
  • The hedge fund imploded in the middle of May, dragging several crypto projects with it underwater.
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Facing the possibility of a protracted legal battle with creditors, troubled Three Arrows Capital has transferred a large number of stablecoins to KuCoin, claims a new report.

PeckShield, a blockchain security and analytics company, revealed on July 5 that embattled Three Arrows Capital (3AC) had moved a sizable portion of its crypto holdings to the KuCoin exchange. The assets include $20 million worth of USD Coin (USDC) and $10 million of Tether (USDT).

Another 20 million USDT appeared to have been transferred to KuCoin with analysts scratching their heads over the reason for the move. On Twitter, there is speculation that 3AC is gearing up for a mega-trade to recoup the losses it suffered in the past few weeks. 

However, according to the latest update from PeckShield on July 6, KuCoin claimed that “0x0D71587c83a28E1AdB9CF61450A2261ABbE33632” is not 3AC’s address.

Three Arrows files for Chapter 15

The decision to move stablecoins comes on the heels of 3AC filing for Chapter 15 bankruptcy protection in the U.S. The filing seeks to protect the hedge fund’s assets in the country during the liquidation process. 

At the end of June, a British Virgin Islands court ordered the liquidation of the 3AC after it defaulted on a large chunk of its loans. The court appointed two senior members from advisory firm Teneo to handle the liquidation.

The hedge fund was slammed with steep fines by the Monetary Authority of Singapore (MAS) for failing to inform the body of changes in shareholding positions and providing misleading statements about the size of company assets.

The long-list of creditors

Three Arrows Capital’s woes began after the TerraUSD (UST) stablecoin de-pegged from the U.S. dollar. The firm had previously purchased $200 million worth of LUNA for the Luna Foundation Guard’s (LFG) raise in Nov, and the massive decline in asset prices did little to help the cause of the hedge fund.

The firm defaulted on a $670 million loan to Voyager Digital, while BlockFi was forced to cancel its $400 million loans to the hedge fund. “BlockFi can confirm that we exercised our best business judgment recently with a large client that failed to meet its obligations on an over-collateralized margin loan,” said Zac Prince, BlockFi CEO.

Other creditors include Deribit and Blockchain.com, with the latter vowing to “hold [3AC] accountable to the fullest extent of the law.” Analysts have warned that market participants should brace themselves for the ripple effects of 3AC’s collapse as the contagion spreads through the ecosystem.

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