Though cryptocurrency is polarizing, there's one thing everyone can agree on: It's volatile. Valuations quickly reach dizzying heights, but can get pulverized into the ground just as fast. Exemplifying that dichotomy is Three Arrows Capital, a Singapore-based hedge fund that filed for bankruptcy on July 1.
Three Arrows Capital was ordered to liquidate its assets by a British Virgin Islands court late last month after it was sued for not repaying its debts. But before the pain inflicted by the onset of crypto winter, as revealed through documents from Singapore's High Court, released on Monday, 3AC founders Su Zhu and Kyle Davies put a down payment on a $50 million yacht.
It was speculated in the filing that the down payment was paid for with borrowed funds. Three Arrows Capital was contacted for comment but did not immediately respond.
The revelation was made through Charles McGarraugh, the chief strategy officer for Blockchain.com, to which court documents reveal 3AC owes $302 million. McGarraugh said in an affidavit he was concerned by Zhu and Davies' extravagant purchases.
"For example, upon information and belief I understand that Messrs. Zhu and Davies reportedly made a down payment on a USD $50 million yacht," he wrote to the Singapore High Court. "It is also my understanding that Mr. Davies intends this yacht to be larger than any yacht owned even by Singapore's richest billionaires."
McGarraugh also pointed to a $35 million home Zhu purchased in Singapore last December.
The overarching revelation from the proceedings has been that 3AC owes $3.5 billion to 27 different crypto creditors. Much of this -- $2.36 billion -- is owed to just one, Genesis. The affidavits were filed on July 7 but made public on Monday by the firm overseeing 3AC's liquidation, Teneo.
Three Arrows Capital was hit hard by the collapse of luna and its associated terraUSD stablecoin. When terraUSD unpegged, it led to $14 billion being wiped from the market. Three Arrows Capital had invested $200 million in terra and couldn't pay back creditors as a result of those losses. Voyager Digital is one of the companies that 3AC owed money to -- Voyager loaned 3AC $650 million in crypto back in March -- and has itself filed for bankruptcy since 3AC's collapse.
Three Arrows Capital managed a fund estimated to be worth $10 billion back in March, reported Fortune