Law enforcement officials have taken into custody Su Zhu, the fugitive co-founder of the insolvent cryptocurrency hedge fund Three Arrows Capital. Zhu, who was allegedly attempting to flee Singapore, was arrested at Changi Airport in the country, as confirmed by the liquidators responsible for overseeing the bankruptcy proceedings of the fund, known as 3AC. This development comes as authorities intensify efforts to address the fallout from the fund’s financial troubles.
Su Zhu, along with co-founder Kyle Davies, has received a four-month prison sentence, as reported by Teneo, the financial advisory firm overseeing the liquidation of 3AC. Currently, Kyle Davies’ location remains undisclosed. This legal action stems from the Singapore Courts’ decision, which found Zhu guilty of willfully disobeying court orders that mandated his cooperation with Teneo’s inquiry into creditors’ claims and the collapse of the multi-billion-dollar fund.
In 2022, at the height of its operations, 3AC oversaw approximately $10 billion in assets, solidifying its position as one of the foremost cryptocurrency hedge funds globally. However, midway through the same year, the firm filed for bankruptcy due to a confluence of factors, including the steep decline in cryptocurrency values and a high-risk trading approach. These challenges resulted in the depletion of its assets, rendering it incapable of meeting its financial obligations to creditors. Notably, 3AC had a substantial list of counterparties, and its downfall triggered a ripple effect of bankruptcies throughout the cryptocurrency sector.
Kyle Davies, who is currently evading authorities, is also subject to a comparable court-issued committal order. Law enforcement has been instructed to locate and apprehend Davies, ensuring his safe apprehension to fulfill his four-month prison term.
During Su Zhu’s period of custody, Teneo has expressed its intention to engage with him on matters pertaining to 3AC. Their primary objective will be to concentrate on the retrieval of assets that either belong to 3AC or have been procured using 3AC’s funds. Furthermore, the firm has not ruled out the possibility of pursuing additional legal actions, potentially including the pursuit of further court orders against Zhu.
“Teneo emphasized that their foremost objective throughout this undertaking has been the retrieval of 3AC’s assets and optimizing returns for its creditors,” stated Teneo in a written announcement.
In January, reports emerged suggesting that both Davies and Zhu were actively seeking investors for a novel enterprise, a distressed debt marketplace called GTX, with a focus on capitalizing on insolvency cases within the industry. Teneo has noted that, in response, the Monetary Authority of Singapore, the regulatory body overseeing investment activities, has imposed a nine-year prohibition on the co-founders, preventing them from engaging in regulated investment endeavors.