Three Arrows Capital (3AC) co-founder Su Zhu faced questioning in a Singapore court from lawyers representing the firm's liquidator, in a bid to recover billions of dollars in assets from the bankrupt fund.
Citing sources familiar with the private proceedings, Bloomberg reported that lawyers for Teneo, 3AC’s liquidator, questioned Zhu on matters including how the crypto hedge fund failed and the whereabouts of billions worth of assets. The liquidators are seeking to recover $1.3 billion from Zhu and 3AC co-founder Kyle Davies, with creditors owed around $3.3 billion in total.
Zhu was arrested in September for failing to follow a court order requiring him to account for his activities as 3AC’s co-founder and investment manager. In September he was sent to jail for failing to cooperate with the investigation. Per Bloomberg, he is set to be released this month based on standard provisions for good behavior.
Today’s court proceedings are a civil matter rather than a criminal one; Zhu and Davies have not faced criminal charges in Singapore over the collapse of 3AC. In September, the pair were barred from financial activity by the Monetary Authority of Singapore (MAS), in a prohibition order that accused 3AC of failing to implement an appropriate risk management framework for its crypto trading activities.
3AC unraveled after racking up millions of dollars in losses following the collapse of the TerraUSD algorithmic stablecoin in May 2022, as crypto exchanges liquidated the fund’s positions after the fund failed to meet margin calls. The Singapore-based hedge fund was ordered to liquidate in June 2022, before filing for bankruptcy the following month.
In April 2023, Zhu and Davies launched a new exchange, OPNX, that enables trading of bankruptcy claims, before launching a new VC fund, 3AC Ventures, in June.
Edited by Stacy Elliott.