Liquidators of the now-defunct crypto hedge fund Three Arrows Capital (3AC), that succumbed to the crash of Luna and TerraUSD, are seeking at least $1.3 billion in compensation from Terraform labs. The claim would help patch the losses that the fund incurred following the 2022 debacle.
Per a report from Bloomberg, the liquidators have filed a lawsuit seeking $1.3 billion in damages. The move is a part of 3AC’s ongoing efforts to recover funds for its creditors, following the hedge fund’s liquidation.
Terraform persuaded 3AC to buy Luna and TerraUSD tokens, by “artificially inflating the price of these tokens,” court papers read. Following the staggering 2022 crash of the TerraUSD and Luna, 3AC suffered substantial losses in other holdings as well.
The fund held around $462 million worth of Luna at the end of April 2022, the court doc noted. However, the value of the holdings plummeted over $2,700 by mid-May 2022, after a massive sell-off. Further, the net value of other digital holdings at 3AC fell by $858 million at the same time.
Claims From 3AC Co-Founders
A British Virgin Islands court appointed 3AC liquidators from the consulting firm Teneo, after the hedge fund’s bankruptcy filing. Teneo estimated that 3AC owed its creditors around $3.3 billion.
In December last year, the court froze approximately $1.14 billion in assets belonging to the co-founders of the fund. The court prohibited co-founders Su Zhu and Kyle Davies, from transferring or selling the assets.
The compensation from Terraform labs to 3AC is still unknown.
In June, the blockchain protocol created by Do Kwon – Terraform – announced that it would cease its operations after a settlement with the SEC. Kwon, who was arrested in Montenegro last year, is facing charges in the US and his native land South Korea. Last week, a Montenegro court ruled that Do Kwon should be extradited to South Korea.
Various other crypto companies were affected by the Terra contagion, including lenders like Celsius, Vauld and Voyager and exchanges, including the historic FTX.
The post Crypto Hedge Fund 3AC Liquidators Seek $1.3B from Terraform Labs: Report appeared first on Cryptonews.
Read More from Sujha Sundararajan on cryptonews.com