Three Arrows Capital files for Chapter 15 bankruptcy, a move that protects its US assets while a liquidation is carried out in the British Virgin Islands
Three Arrows Capital had been weighing asset sales or a rescue after major liquidations, including an investment in Luna, before a British Virgin Islands court ordered its liquidation and appointed Teneo to handle insolvency. The Chapter 15 filing extends that court-led process into the US, replacing a prospective turnaround with cross-border asset protection.
The filing matters because it centralizes the fund's remaining US-facing assets under the British Virgin Islands liquidation rather than leaving them exposed to separate creditor actions.
First-order effects
Three Arrows Capital's US assets receive Chapter 15 protection while the British Virgin Islands liquidation proceeds, giving Teneo a clearer route to administer the estate across jurisdictions.
Creditors seeking US assets must pursue recovery through the recognized liquidation process rather than immediately acting against those assets independently.
Second-order effects
The cross-border filing makes asset sales and creditor distributions subject to the liquidators' process, rather than the rescue and sale options Three Arrows had previously been exploring in its search for asset sales or a rescue.
The court-led process raises the importance of asset tracing and founder cooperation; liquidators later sought subpoenas after reporting they could not locate the founders, as covered in their effort to secure the founders' cooperation.
Third-order effects
Three Arrows' progression from mounting liquidations to a British Virgin Islands court-ordered liquidation shows how offshore crypto investment vehicles can require formal recognition in multiple jurisdictions to marshal assets and coordinate creditors.
For crypto lenders and counterparties, the case reinforces that insolvency recovery can hinge on legal control of assets across borders rather than on a rapid private rescue.
The trend: Crypto credit failures are pushing offshore fund collapses into multi-jurisdictional insolvency processes designed to preserve and distribute assets among creditors.
Big win for DeFi this cycle. While CeFi lenders are seeing their equity getting totally wiped out, the big DeFi protocols are only down around 90% https://twitter.com/...
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