Three Arrows Liquidators Target $30M Yacht in Hunt for Assets
Teneo Says Hedge Fund Founders Are Uncooperative as It Corrals Assets for Creditors
By: Aleksandar Gilbert •Dive
How much for Much Wow?
That’s the amount liquidators are seeking for the yacht purchased by Zhu Su and Kyle Davies, the founders of defunct crypto hedge fund Three Arrows Capital.
Once a pacesetting $10B fund, Three Arrows’ collapse in June sent shockwaves through the industry and briefly sent the price of Ether below $1,000. At the end of June, a court in the British Virgin Islands tapped Teneo to liquidate Three Arrows and repay its creditors.
On Friday, Teneo’s attorneys told the U.S. Bankruptcy Court for the Southern District of New York they had taken control of almost $36M in fiat currency, about 2,000 NFTs, as well as an unspecified amount of crypto. Teneo plans to use the assets to repay the hedge fund’s creditors.
Teneo’s lawyers also said they are trying to recover the proceeds from the sale of Much Wow.
Court documents made public earlier this year revealed the pair had purchased a yacht “that Mr. Davies intends … to be larger than any yacht owned even by Singapore’s richest billionaires.” New York Magazine recently reported that the yacht was to be named Much Wow, after the infamous Shiba Inu meme.
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On Friday, Teneo attorneys told the court that Zhu and Davies’ contract to purchase Much Wow had been canceled by the shipbuilder due to “non-payment of final amounts owned.”
It has since been sold to another buyer. Proceeds from the sale of the Much Wow remain with the shipbuilder and will be distributed to Much Wow Limited, the entity to which the yacht had been registered, Teneo said in the filing. Teneo “has filed an interim claim … for USD $30m.”
Teneo attorneys complain that the fund’s co-founders have been uncooperative, making recovery of Three Arrows’ assets difficult. The attorneys also allege Zhu and Davies “appear to be in Bali, Indonesia and/or [United Arab Emirates] – jurisdictions known for difficulties in enforcing foreign court orders.”
In response, Daveis shared a statement Saturday that accused liquidators of making “extravagant allegations” and suggested they were the ones being difficult.
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“We are of the view that the Liquidators have not engaged us constructively to try to maximize returns to creditors,” the statement read. “It appears to us that the liquidators have not even taken our assistance, and suggestions in relation to Starkware, with guidance on other assets, and instead, we were pushed away. Nor have the Liquidators distributed any funds to creditors after months of sitting on cash and other fund assets.”
Davies said he and Zhu were “actively pursuing setting up a roundtable discussion with creditors to talk through asset discovery.”
After months of silence, Zhu and Davies have started speaking again, commenting daily on Twitter – sometimes to offer life advice, but more often to bask in the downfall of FTX founder Sam Bankman-Fried.
Teneo doesn’t like it.
“Founders engage with media,” a slide deck prepared for Friday’s court appearance reads, “but not liquidators.