Three Arrows Capital says its founders still not cooperating with asset recovery

:Liquidators for bankrupt crypto hedge fund Three Arrows Capital (3AC) said on Friday that the company's founders are refusing to cooperate with asset recovery efforts, hindering the company's ability to return funds to creditors.

Founders Kyle Davies and Su Zhu are more interested in rehabilitating their reputation than helping their own company's creditors, attorney Adam Goldberg said in bankruptcy court in New York. Davies has done interviews recently commenting on the implosion of crypto exchange FTX, attempting to shift blame for Three Arrows' own collapse, Goldberg said.

"While the founders have not engaged with liquidators, they have repeatedly engaged with the media in an apparent effort to rehabilitate their reputations," Goldberg said. "It's interesting to say the least, that the first time we've heard this theory that FTX caused the downfall of this debtor was after FTX's own sensational collapse."

Despite incomplete access to records and accounts, Three Arrows' liquidators have recovered some assets belonging to creditors, including $35 million in U.S. dollars and several different cryptocurrency tokens, liquidator Russell Crumpler said in court. Recovery efforts are ongoing, Crumpler said.

Three Arrows was the first major crypto firm to go bankrupt in 2022, brought down by the collapse of cryptocurrencies Luna and TerraUSD in May. It filed for bankruptcy in the British Virgin Islands in late June. The liquidators were appointed by that court to wind down the company and pay its debts. They filed a parallel bankruptcy case in Manhattan to shield Three Arrows' U.S. assets.