- Three Arrows Capital collapsed in the previous year due to the failure of leveraged bets.
- In September, Su Zhu, one of the co-founders, faced arrest in Singapore.
In a recent development, a British Virgin Islands court has issued a freeze order on assets amounting to approximately $1 billion linked to the co-founders of Three Arrows Capital, a cryptocurrency hedge fund that faced a significant downfall in 2022.
The court order specifically targets co-founders Su Zhu and Kyle Davies, along with Davies’ wife, Kelly Chen, restraining them from transferring or selling assets valued at up to $1.14 billion. Teneo, the appointed liquidator for Three Arrows Capital, conveyed this information, estimating that creditors are collectively owed around $3.3 billion.
Three Arrows Capital’s Downfall
Once a prominent player in the crypto-native hedge fund landscape, Three Arrows Capital experienced a collapse in 2022 due to a series of unfortunate investment decisions. This downfall was part of a broader trend in the crypto industry, marked by a significant market downturn and various collapses within the sector.
Allegations and Worldwide Freezing Order
The freezing order is a result of claims made by the liquidators, asserting that the founders, Su Zhu and Kyle Davies, should be held accountable for the deterioration of Three Arrows Capital’s position. The liquidators are pursuing these claims, seeking an amount equivalent to the value covered by the freezing orders.
Teneo, in its official statement, explained, “The worldwide freezing order has been sought in connection with claims that allege, amongst other things, that the founders should be held responsible for causing 3AC’s position to deteriorate by an amount that is equivalent to the value of the freezing orders sought.”
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Lack of Response and Legal Challenges
Notably, Kyle Davies and Su Zhu, as well as Zhu’s legal representative, have not responded to requests for comment on this matter. Three Arrows Capital, which was initially based in Singapore, filed for bankruptcy in the British Virgin Islands. Teneo, appointed by the British Virgin Islands court as the liquidator, has previously accused the founders of not cooperating meaningfully in the process.
Singapore’s Involvement and Zhu’s Arrest
This announcement follows a domestic freezing order issued by the Singapore Court, as revealed by Teneo. Moreover, Su Zhu faced an arrest in September at Singapore’s Changi Airport while attempting to leave the country. Subsequently, both Su Zhu and Kyle Davies have been prohibited from engaging in any regulated activity in Singapore.
Also Read: Trading Veteran Peter Brandt Shorts Ethereum to $650 After Calling it “Piece of Junk”
Zhu is expected to be released later this month based on standard provisions for good behavior, as reported by Bloomberg News.
Reputational and Financial Fallout
Su Zhu and Kyle Davies, once celebrated figures during the crypto bull run, have witnessed a decline in both reputation and fortune due to the revelation of risky practices. This parallels the recent conviction of Sam Bankman-Fried, founder of FTX Trading Ltd., who was found guilty of fraud after a month-long trial, pitting his testimony against that of some of his closest associates.
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