Three Arrows Capital crypto hedge fund liquidators claim they can’t find the founders

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Where the hell are Su Zhu and Kyle Davies? The founders of the cryptocurrency hedge fund Three Arrows Capital (3AC) are nowhere to be found, according to officials tasked with liquidating the bankrupt company (via Reuters).

The fate of Zhu and Davies is currently unknown, according to a court document filed Friday, and the liquidators say they have not received any significant cooperation from either. On Tuesday, a judge granted 3AC’s liquidators full control of 3AC’s assets and prevented them from transferring money from their accounts.

Singapore-based 3AC filed for Chapter 15 bankruptcy earlier this month, a measure aimed at protecting foreign corporate assets from U.S. creditors. News of the filing for bankruptcy emerged after 3AC defaulted on a $ 670 million loan from cryptocurrency broker Voyager Digital, which has since also filed for bankruptcy. 3AC allegedly failed to repay $ 270 million to the cryptocurrency exchange Blockchain.com. A British Virgin Islands court has instructed business management company Teneo to oversee the liquidation of 3AC.

There is an imminent threat that the duo may attempt to transfer the company’s remaining funds elsewhere

Russell Crumpler and Christopher Farmer, two senior directors of Teneo, say they couldn’t reach Zhu and Davies. In the courtroom filing, Crumpler and Farmer claim they attended a Zoom call with people who identified as Su Zhu and Kyle, but their video was off and they were silent the whole time, neither of them didn’t speak, even if they were questions. asked directly.

During the Zoom call, the two founders communicated via representatives of the Singapore-based law firm Advocatus and Solitaire. Farmer claims he even tried to locate Zhu and Davies at 3AC’s Singapore headquarters, only to find a locked door and a pile of unopened mail. The filing notes that Zhu may attempt to sell his $ 35 million mansion in Singapore, citing various rumors.

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Crumpler and Farmer say there is an imminent risk that the duo will attempt to transfer the company’s remaining funds elsewhere. In this case, that risk is increased because a significant portion of the debtor’s assets are cash and digital assets such as cryptocurrencies and easily transferable non-fungible tokens, according to the deposit. Diplomatic missions [Teneo]the debtor [3AC]and its creditors as a whole would be irreparably damaged if the debtor’s assets were sold during the transitional period.

Unfortunately, our willingness to work with the liquidators was met with hate speech. I hope you have acted in good faith regarding the StarkWare Token Warrants. pic.twitter.com/CF73xI8r6n

Zhu Su (@zhusu) July 12, 2022

After Crumpler and Farmer filed the petition, Zhu accused the liquidators of soliciting. In a Twitter post, Zhu attached two screenshots of the email correspondence between Crumpler and Advocatus and lone rep Christopher Anand Daniel, who claims that the liquidators wished to ask if the talks were conducted impartially, so that they could argue in court. he could use the deposits without notifying Zhu and Davies.

So it appears that contrary to your claim that you wanted to engage our customers in good faith and constructively, you were already prepared to make this request and were actually attracting our customers, adds Daniel. He goes on to explain that the founders and their families have been threatened with physical violence and have also worked under great pressure to answer questions from the Monetary Authority of Singapore.

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This explains why Davies and Zhu would not cooperate with the liquidators. But they have no plans to meet Teneos’ agents yet. Daniels refused to join a phone call on his behalf. Based on your response, we will let you know when our customers can reasonably expect to speak with you.

The apparent disappearance of Davies and Zhus isn’t all that unusual in the cryptocurrency world. Users had a hard time suing Binance last year after the exchange went dead when Bitcoin’s value plummeted … because they weren’t quite sure how to sue. And in another bizarre case, Gerald Cotten, CEO of cryptocurrency exchange QuadrigaCX, died with his clients’ funds, estimated at around $ 250 million, missing. (Mysteriously, former Quadriga executive Michael Patryn founded the Wonderland DeFi protocol.)

The collapse of major cryptocurrency companies like 3AC has caused a lot of damage to the cryptocurrency market which is probably not yet fully recognized. Crypto lending companies Babel Finance and Celcius have also been rocked by market turmoil as the two companies froze transactions in the midst of a crypto winter.

Updated July 12 at 6:57 PM ET: Updated to add a response from Su Zhu and his legal representative and to note that a court has granted liquidators control of 3AC’s assets.

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