Bankrupt Three Arrows Capital’s NFTs to Be Sold

Bankrupt Three Arrows Capital’s NFTs to Be Sold 

Teneo, the liquidation company charged with overseeing the bankruptcy proceedings against beleaguered crypto fund Three Arrow Capital (3AC), has received over 300 non-fungible tokens (NFTs) from Starry Night Capital, a fund launched by the co-founders of 3AC.

The collection, which is estimated to be worth around $35 million, will be sold to maximize recoveries on behalf of all creditors. Last week, Teneo said that all of the NFTs “have been accounted for and are in our possession or are being transferred to us.”

Starry Night was raised by 3AC and pseudonymous investor Vincent Van Dough last summer with the intention of collecting premium NFTs. Data from a Dune Analytics panel suggests the fund spent about $35 million on NFTs last year.

As per the report, VVD, pseudonymous NFT collector Vincent Van Dough, has also offered to help with the eventual sale of 3AC NFT and will likely oversee the disposition of the assets with the company. 

In 2021, 3AC co-founders Su Zhu, Kyle Davies, and pseudonymous NFT collector Vincent Van Dough formed Stary Night Capital, a fund focused on non-fungible tokens that, initially, intended to invest exclusively in “hottest” NFTs.

Considering that the hedge fund owes its creditors a whopping $2.8 billion, the seized NFTs, estimated at $35 million, represent just a tiny fraction of 3AC’s total debt, or around 1.3%.

What is Starry Night Capital NFT

Three Arrows Capital founders Su Zhu and Kyle Davies, along with an NFT collector and dealer, who goes by the pseudonym Vincent Van Dough, established Starry Night Capital in August last year. The plan was to raise a $100 million fund. However, it is believed that only $35 million was spent on the collection.

Speaking at the time, collector Vincent Van Dough said:

“Our thesis is simple, we believe that the best way to gain exposure to the cultural paradigm shift that NFTs are ushering in is to own the best pieces from the most desired outfits.”

To this end, Starry Nights Capital went on a spending spree, buying some of the highest-priced NFTs on the market at the height of the NFT explosion. Things looked good everywhere.

How 3AC Failed?

Founded in 2012, Three Arrows Capital was a major cryptocurrency hedge fund focused on investing in digital asset companies. The fund, known for its highly leveraged bets, reportedly suffered heavy losses from the Terra implosion and faced more trouble as the cryptocurrency crash continued.

In mid-June, rumors about 3AC’s problems surfaced on Crypto Twitter and further exacerbated customer confidence. Finally, on June 27, a court in the British Virgin Islands ordered the liquidation of the crypto fund. The partners of Teneo, a New York-based firm specializing in corporate consulting and insolvency, were tasked with overseeing the insolvency of 3AC.

In early July, 3AC filed for Chapter 15 bankruptcy, a move designed to protect the assets of foreign companies from creditors in the US. The bankruptcy filing came after the crypto fund defaulted on a loan. of $670 million provided by crypto broker Voyager Digital, which has also since filed for bankruptcy.

In addition to Voyager Digital, other major 3AC creditors include bankrupt crypto lender Celsius, Genesis, Galaxy Digital, Digital Currency Group (DCG), BitGo, Algorand, CoinList, and Blockchain Access UK. Interestingly, 3AC co-founder Zhu Su is also listed among the creditors and is seeking $5 million.

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