03 Oct, 2023

Co-founder for 3AC’s Arrested while Attempting to Flee the Country

Three Arrows Capital arrested

TL;DR

  • The Three Arrows Capital hedge fund was arrested at Singapore’s Changi Airport while trying to leave the country.
  • Teneo, the liquidator firm, admits it will pursue all opportunities to foster Su Zhu’s cooperation to recover 3AC’s assets for creditors.

3AC, Co-founder to Serve Four Months in Prison

In unexpected news, Crypto hedge fund mogul Su Zhu was arrested at Changi Airport, Singapore, trying to flee the country.

This follows sentencing of absentia earlier this week for Zhu and his co-founder, Kyle Davies, who is facing four months in prison.

Su Zhu arrested at Changi Airport in Singapore.
Su Zhu, Co-fonder of 3AC| Source: Coincu

The two face charges of failing to cooperate with liquidators investigating the Three Arrows Capital (3AC) collapse.

In a statement, Teneo, a financial advisory company controlling 3AC liquidation and management affairs, announced that it acquired a committal order against Su Zhu.

As a result, Mr. Zhu will be held in prison to serve his sentence of 4 months under the committal order, during which time the liquidators will seek to engage with him on matters relating to 3AC, focusing on the recovery of assets that are either the property of 3AC or that have been acquired using 3AC’s funds.

Teneo, the court-appointed liquidator, said in a statement.

Afterward, the Co-founder failed to comply with court orders to cooperate with the liquidation investigation.

The financial advisory company added that a similar committal order would apply to Kyle Davies to serve the four-month imprisonment.

His whereabouts remain unknown.

3ACs Counts Losses from Implosion of Terra/Luna Ecosystem

The dramatic arrest is just the beginning of the downfall of Zhu, who was making a name for himself in the crypto space.

Partnering with Davies, they founded Crypto hedge fund Three Arrows Capital, which quickly scaled the ranks to become the most influential fund, estimated to manage $10 billion in assets.

All these came crashing down earlier this year after 3AC caught up in the implosion of the Terra/Luna ecosystem.

The bear market led to losses and margin calls that the Three Arrows Capital hedge fund could not meet, resulting in the fund filing for bankruptcy.

The colapse of Three Arroes Capital.
The collapse of 3AC | Source: Bankless/YouTube

They didn’t repay a $670 million loan to the crypto lender, Celsius Network.

3AC’s bankruptcy sparked rumors and hurt companies like Voyager Digital and Genesis Asia Pacific, which then went bankrupt.

Teneo claims Zhu and Davis took on more debt even when they knew 3AC was running out of money.

What’s Next for Crypto Hedge Fund Three Arrows Capital?

All eyes are on Teneo to see whether it will recover huge assets for Three Arrows Capital’s creditors.

It’s alleged that these two founders were able to transfer lump sums of funds to other new entities before its collapse.

With this arrest, liquidators have leverage and can easily follow the money trail.

Moreover, there are potential criminal charges for the founders, which Singapore’s commercial affairs department is investigating.

If it finds evidence of fraud, prosecutors will file criminal counts against them—meaning stiffer penalties against 3AC’s founders.

The meltdown created by 3AC’s failures is still ongoing. The market cap decreased from over $3 trillion to $950 billion.

Will the crypto sphere be able to rebuild investor’s trust after these events? Absolutely! 

While crypto will likely recover, investors’ trust must be rebuilt with better transparency, accountability, and regulation.