Key Takeaways
- • Authorities arrested Su Zhu, co-founder of the bankrupt crypto hedge fund Three Arrows Capital (3AC), at Changi Airport in Singapore while he was apparently attempting to leave the country, according to liquidators handling the fund's bankruptcy estate.
- • Zhu and co-founder Kyle Davies have each been sentenced to four months in prison, per Teneo, the financial advisory firm handling 3AC's liquidation; Davies remains at large and is subject to a similar committal order.
- • At its 2022 peak, 3AC managed about $10 billion in assets before filing for bankruptcy in mid-2022 following a crypto price collapse and a high-risk trading strategy.
- • The Monetary Authority of Singapore has barred Zhu and Davies from conducting regulated investment activity for nine years.
- • Teneo will work with Zhu in custody on recovering 3AC assets and may seek further court orders against him.
Summary
Authorities have arrested Su Zhu, co-founder of the bankrupt digital asset hedge fund Three Arrows Capital, after he was apprehended at Changi Airport in Singapore while apparently trying to leave the city-state, according to liquidators handling the collapsed fund's bankruptcy estate. The liquidators announced the arrest in a statement on Friday, September 29, 2023.
Zhu and co-founder Kyle Davies have both been sentenced to four months in prison, according to Teneo, the financial advisory firm handling 3AC's liquidation. The Singapore Courts ruled against Zhu for deliberately failing to comply with court orders compelling him to cooperate with Teneo's investigation into creditors' claims and the implosion of the fund. Davies' whereabouts remain unknown; he faces a similar committal order, and police have been directed to arrest him and bring him in "safely" to serve his sentence.
At its peak in 2022, 3AC managed about $10 billion in assets, making it one of the most prominent crypto hedge funds globally. The firm filed for bankruptcy in mid-2022 after a plunge in cryptocurrency prices and a particularly risky trading strategy wiped out its assets and left it unable to repay lenders. Its collapse had a lengthy list of counterparties and set off a wave of bankruptcies across the sector.
While Zhu is in custody, Teneo said it will work with him on matters relating to 3AC, focusing on recovering assets that are either property of 3AC or were acquired using its funds, and it may seek further court orders against him. Teneo stated that the liquidators' priority has been recovering 3AC's assets and maximizing returns for creditors. The Monetary Authority of Singapore, which regulates investment activities in the city-state, has barred both co-founders from conducting regulated investment activity for nine years, according to Teneo.
Earlier in 2023, Davies and Zhu were reportedly seeking investors for a new venture, a distressed debt marketplace called GTX, aimed at capitalizing on industry bankruptcies.
Zhu and co-founder Kyle Davies have both been sentenced to four months in prison, according to Teneo, the financial advisory firm handling 3AC's liquidation. The Singapore Courts ruled against Zhu for deliberately failing to comply with court orders compelling him to cooperate with Teneo's investigation into creditors' claims and the implosion of the fund. Davies' whereabouts remain unknown; he faces a similar committal order, and police have been directed to arrest him and bring him in "safely" to serve his sentence.
At its peak in 2022, 3AC managed about $10 billion in assets, making it one of the most prominent crypto hedge funds globally. The firm filed for bankruptcy in mid-2022 after a plunge in cryptocurrency prices and a particularly risky trading strategy wiped out its assets and left it unable to repay lenders. Its collapse had a lengthy list of counterparties and set off a wave of bankruptcies across the sector.
While Zhu is in custody, Teneo said it will work with him on matters relating to 3AC, focusing on recovering assets that are either property of 3AC or were acquired using its funds, and it may seek further court orders against him. Teneo stated that the liquidators' priority has been recovering 3AC's assets and maximizing returns for creditors. The Monetary Authority of Singapore, which regulates investment activities in the city-state, has barred both co-founders from conducting regulated investment activity for nine years, according to Teneo.
Earlier in 2023, Davies and Zhu were reportedly seeking investors for a new venture, a distressed debt marketplace called GTX, aimed at capitalizing on industry bankruptcies.
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