Kyle Davies and Su Zhu have allegedly fled Signapore. The failing crypto hedge fund had just filed for Chapter 15 bankruptcy with a US court With a previous history of boasting it's balance sheet of $10 billion in managed assets, one could make an educated guess they are doing their best to hang on to what assets they can, especially having been served a default on $650m loan, and an ordered liquidation from a British Virigin Island Court on the same day (6.27.22.).

     The more information that comes out, the more it becomes apparent that Three Arrrows Capital was acting illegitimately, or at the least, unethically. It's still hard to gauge how many entities across the crypto sphere are seriously affected by 3AC's insolvency; protocols are claiming that 3AC only held a small part of their treasuries; yet, anonymous sources connected to Three Arrows Capital claim that 3AC did indeed hold a large part of certain protocol treasuries. One of those protocols is the Kyber Network, who announced they would take legal action against 3AC, just 2 days after the Voyager notice of Default and the BVI court's liquidation order. Alledgedly, part of 3AC's treasury management service included entrusting a portion of said treasury with 3AC for potential profit. In the case of Kyber Network, that has yet to be returned, which is one of their calls to legal action. Kyber Network claims that the portion of the treasury that 3AC held was too insignificant to cause damage to Kyber's asset price.

     Another firm, 8 Blocks Capital, partnered trading firm with 3AC, alleges that Three Arrows Capital misappropriated $1m of their funds. According to Danny Yuan, CEO of 8BC, 3AC was "leveraged long" and getting margin calls everywhere. 

    In a typical Chapter 15 bankruptcy, "company creditors" have the priority to be paid off first. In this filing, company creditors are listed as Su Zhu and Kelly Kaili Chen (Davie's wife). This essentially means that Zhu and Davies, who made the executive decisions which got their firm into this situation, are looking to be compensated for damages first. Founders being company creditors is an ethical set up for start ups, especially when founders use their own risk and capital to start up, then go under. However, this situation is completely different, Three Arrows Capital having been founded in 2012. And that 10 billion dollar balance sheet? Turns out it's mostly uncollateralized loans these days. 

   What do you think? Ethical, or no?

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