3AC’s curious tale of missing founders and assets

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The idea of racking up debt can be unsettling. Perhaps that explains why millennials in the US are more afraid of credit card debt than of climate change or war. While household debt in Asia piled up amid the pandemic, it’s still frowned upon in many cultures and is seen as a financial tool often used as a last resort.

Nonetheless, if used sensibly, debt can be invaluable in building wealth and creating value for an economy. It allows owners to retain equity while expanding their businesses. In fact, a healthy level of public debt will likely have a positive impact on a nation’s long-term economic growth prospects, thereby increasing investor confidence.

However, in today’s feature piece, Tech in Asia looks at how an overreliance on debt can cause mayhem through the story of Three Arrows Capital (3AC), whose founders’ whereabouts have been unknown since the crypto hedge fund’s spectacular collapse.

The premium story also details how the firm’s demise has left the bankruptcy court scrambling to retrieve digital assets, some of which will likely never be recovered.

Today we look at:

• The recovery of 3AC’s missing assets
• Axie Infinity head moving millions before transaction freeze
• Other newsy highlights such as Zilingo’s latest C-suite departure and Ola’s production halt

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A vanishing act

Image credit: Timmy Loen

“It’s going to be incredibly difficult to get a complete inventory of all the assets they had, what they still have, and where the balance has gone,” Thio Shen Yi tells Tech in Asia. It’s hard to believe that a senior counsel at the Supreme Court of Singapore is referring to 3AC – a hedge fund giant that until recently had an estimated US$10 billion in assets.

• Tipping point: Having taken massive loans using cryptocurrencies as collateral, 3AC found itself in hot water in May, when it lost over US$600 million amid the collapse of TerraLab’s UST and Luna tokens. As the chaos from the Terra mishap spread and token prices plunged, lenders demanded margin calls. Those calls went unanswered, and eventually, over US$400 million in 3AC’s assets were liquidated to pay off lenders.
• Allegedly owed: Creditors claim 3AC owes almost US$2.4 billion in loans to Genesis Global Trading, a crypto brokerage firm, US$650 million in stablecoins USDC and USDT to bankrupt crypto broker Voyager Digital, US$270 million in debt to Blockchain.com, and some 997 bitcoins and 16,000 ether to DRB Panama, the operations arms of dutch crypto exchange Deribit.
• Uncharted territory: 3AC’s situation isn’t your run-of-the-mill bankruptcy case. The need to recover cryptocurrencies might be a relatively new problem for the legal community, but lawyers are increasingly hiring blockchain analysts to track these assets. However, even crypto assets that investigators do know about could be forever locked away, unless they can find the private keys that unlock them.

Read more: Mission impossible: Recovering 3AC’s missing assets

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