Liquidators from Three Arrows Capital are intensifying their efforts to recoup approximately $1.3 billion from the company’s co-founders, Su Zhu and Kyle Davies.

This figure represents the losses allegedly incurred by the duo in the lead-up to the firm's downfall, as per an anonymous source with insights into the liquidators’ demands, Bloomberg reported.

During a recent meeting with the hedge fund's creditors, which took place on a Tuesday, the liquidators talked about the accusations leveled against Zhu and Davies.

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The source stated that the co-founders are accused of steering Three Arrows into adopting considerable leverage from May to June 2022, following substantial losses that were primarily attributed to ill-advised investments in Luna (CRYPTO: LUNA) tokens, among other assets.

At that point in time, the firm was already insolvent, the liquidators argue.

Consequently, they have initiated legal proceedings against Zhu and Davies in a court situated in the British Virgin Islands, with the intention of recuperating the losses for the creditors of the firm, according to the source.

Zhu took to Twitter in June of last year to comment on the issue, stating that their "good faith efforts to cooperate with liquidators were met with baiting."

The failure of Three Arrows Capital took place during a bearish phase for cryptocurrencies and had adverse effects on platforms like BlockFi and Voyager Digital Ltd., both of which declared bankruptcy shortly after Three Arrows went into liquidation.

The liquidators, who are partners at the consulting and advisory firm Teneo, were appointed by a court in the British Virgin Islands last year.

They are working to retrieve funds on behalf of Three Arrows’ creditors, who are collectively owed close to $3.3 billion.

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