Co-Founder of Bankrupt Crypto Hedge Fund Arrested in Singapore

Co-Founder of Bankrupt Crypto Hedge Fund Arrested in Singapore

Su Zhu, co-founder of the insolvent digital asset hedge fund Three Arrows Capital and a crypto fugitive, has been arrested while allegedly attempting to leave Singapore. Liquidators overseeing the bankruptcy proceedings for the fund, referred to as 3AC, announced the arrest, which occurred at Changi Airport in Singapore.

Both Su Zhu and Kyle Davies, co-founders of Three Arrows Capital and central figures in the fund's insolvency, have received four-month prison sentences. This information comes from Teneo, the financial advisory firm overseeing the liquidation of 3AC. Currently, Kyle Davies' whereabouts are unknown.

Zhu's prison sentence was a result of his deliberate non-compliance with court orders. These orders required him to cooperate with Teneo's investigation into creditors' claims and the collapse of the multibillion-dollar fund. The Singapore Courts ruled against him in this matter.

In 2022, at its peak, 3AC managed approximately $10 billion in assets, ranking it among the most prominent crypto hedge funds globally. However, the firm filed for bankruptcy in mid-2022 due to a combination of factors, including the sharp decline in cryptocurrency prices and a high-risk trading strategy, which resulted in the loss of its assets and its inability to repay lenders. 

The collapse of 3AC had significant repercussions throughout the cryptocurrency sector, leading to a series of bankruptcies among its counterparties.

Kyle Davies, the co-founder of the bankrupt digital asset hedge fund Three Arrows Capital (3AC), is currently evading authorities, and the court has issued a committal order for his arrest. Law enforcement has been instructed to apprehend Davies and ensure his safe custody so he can serve his four-month prison sentence.

During the time Su Zhu is in custody, the financial advisory firm Teneo plans to collaborate with him on issues related to Three Arrows Capital (3AC), with a focus on recovering assets belonging to 3AC or acquired using 3AC's funds. Teneo also mentioned the possibility of seeking additional court orders against him in this regard.

During the entire process, the primary focus of the liquidators has been the recovery of Three Arrows Capital's (3AC) assets and optimizing returns for its creditors, as stated by Teneo in a written statement.

In January, Kyle Davies and Su Zhu were said to be trying to attract investors for a new venture called GTX, which aimed to establish a distressed debt marketplace focused on opportunities arising from bankruptcies within the industry.

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