UPDATE 3-Three Arrows Capital says its founders still not cooperating with asset recovery

(Adds Three Arrows Capital founder response to Friday story)

By Dietrich Knauth

Dec 3 (Reuters) - Liquidators for bankrupt crypto hedge fund Three Arrows Capital(3AC) said on Friday that the company's founders are refusing to cooperate with asset recovery efforts, hindering the company's ability to return funds to creditors.

Founders Kyle Davies and Su Zhu are more interested in rehabilitating their reputation than helping their own company's creditors, the liquidators' attorney Adam Goldberg said in bankruptcy court in New York. Davies has done interviews recently commenting on the implosion of crypto exchange FTX, attempting to shift blame for Three Arrows' own collapse.

"It's interesting to say the least, that the first time we've heard this theory that FTX caused the downfall of this debtor was after FTX's own sensational collapse," Goldberg said.

Davies said in a Nov. 16 interview with CNBC that FTX and its affiliated trading platform Alameda Research "hunted our positions," crashed the price of the cryptocurrency Luna, and "took us down." Davies also said he was cooperating with the fund's liquidators.

Goldberg disputed Davies' assertions on Friday, saying that he and Zhu took steps to undermine asset recovery efforts.

Someone had "ransacked" hard drives from locked Three Arrows offices before the liquidators gained access, and investigators determined that the founders had spent company money on a super-yacht called "Much Wow," Goldberg said. The liquidators are attempting to recover $30 million spent on the yacht, and will bring other recovery actions in the near future, Goldberg said.

Davies said on Saturday in a tweet that he is of the view that the liquidators have not engaged with them "constructively".

"It appears to us that they are intent on making threats against us, and spending a lot of time, and money on continuing court proceedings in number of jurisdictions, like Singapore, the U.S. and the BVI (British Virgin Islands)," he added in a statement posted on Twitter.

He also said he is pursuing setting up a round table discussion with creditors to talk through asset recovery and a path forward.

Three Arrows said in a Friday court filing that the founders are currently based in the United Arab Emirates and Indonesia, countries not known for cooperating with international court orders.

Despite incomplete access to records and accounts, Three Arrows' liquidators have recovered some assets belonging to creditors, including $35 million in U.S. dollars and several different cryptocurrency tokens, liquidator Russell Crumpler said in court. Recovery efforts are ongoing, Crumpler said.

Crumpler did not say how much cryptocurrency the liquidators have recovered, but he said that Singapore-based Three Arrows has regained control over accounts that held more than 60 different types of cryptocurrency tokens.

Three Arrows was the first major crypto firm to go bankrupt in 2022, brought down by the collapse of cryptocurrencies Luna and TerraUSD in May. It filed for bankruptcy in the British Virgin Islands in late June. The liquidators were appointed by that court to wind down the company and pay its debts. They filed a parallel bankruptcy case in Manhattan to shield Three Arrows' U.S. assets. (Reporting by Niket Nishant in Bengaluru and Dietrich Knauth in New York and Sneha Bhowmik in Bengaluru; Editing by Maju Samuel, Alexia Garamfalvi, Chizu Nomiyama and Marguerita Choy)