Bankrupt Crypto Hedge Fund Co-Founder Su Zhu Arrested – Su Zhu, one of the co-founders of the now-bankrupt crypto hedge fund Three Arrows Capital, found himself detained by authorities at Singapore Changi Airport in a dramatic turn of events on a Friday. The apprehension came as he attempted to leave the country, with reports confirming that the arrest followed a committal order issued to the liquidators of Three Arrows Capital.
Zhu’s alleged refusal to comply with a court order mandating his cooperation with the investigation and the accountability of his activities within 3AC led to this legal action, as stated by the liquidators. His sentence of four months behind bars, as detailed in the statement, will be a critical period during which the liquidators plan to collaborate with him to recover the assets still owed to creditors by 3AC.
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This development follows a similar court order in Singapore for the arrest of Zhu’s co-founder, Kyle Davies. The downfall of the $4 billion hedge fund began with its Chapter 15 bankruptcy filing in June 2022, following the collapse of Terraform Labs’ TerraUSD stablecoin and sister cryptocurrency Luna, investments that the firm had heavily supported.
Since the bankruptcy announcement last year, the company’s liquidators, operating under the consulting and advisory firm Teneo, have been diligently working to recover $3.3 billion owed to the company’s creditors. Interestingly, these liquidators are actively pursuing $1.3 billion in personal liability from Zhu and Davies, as reported by Bloomberg. These significant claims stem from debts that the co-founders accrued for the company in the months leading up to the financial turmoil.
Moreover, Singapore’s financial regulatory authority, the Monetary Authority of Singapore, recently imposed a nine-year ban on Zhu and Davies, effectively preventing their involvement in the country’s regulated financial sector. This ban extends to positions such as directors, majority shareholders, and management roles in capital market services firms.
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In a bizarre twist, the co-founders, despite the legal troubles surrounding their former hedge fund, had been working on a novel venture called OPNX, a crypto exchange designed to facilitate the trading of bankruptcy claims. Their actions have raised eyebrows, as they appeared to show little remorse for their role in the Three Arrows Capital collapse. Earlier reports suggested that, at least for a time, they were relishing a more leisurely life in Bali, Indonesia, as revealed in a profile by the New York Times in June.