A court has
frozen up to $1.14 billion in assets belonging to the founders of Three Arrows
Capital (3AC), a now-defunct cryptocurrency hedge fund. The order prevents Su
Zhu, Kyle Davies, and Davies’ wife, Kelly Chen, from transferring or selling
these assets.
The freeze
comes as Three Arrows Capital faces liquidation. The firm was once one of the
largest crypto-focused hedge funds before a series of risky bets led to its
demise last year, amid a broader crypto market rout.
According
to liquidator Teneo, the freeze order was issued by a British Virgin Islands
court. Teneo estimates that 3AC creditors are owed about $3.3 billion. The
liquidator alleges that Zhu and Davies should be held responsible for the hedge
fund’s failure.
“The
worldwide freezing order has been sought in connection with claims that are
being pursued by the liquidators 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,”
Teneo commented.
Earlier
this year, Zhu was arrested in Singapore for allegedly attempting to flee the
country. Both he and Davies have been banned from conducting regulated
financial activity in Singapore for nine years. Zhu is expected to be released
from prison this month.
Breaking: ZHU Su, co-founder of failed crypto hedge fund Three Arrows Capital, was apprehended at Changi Airport whilst attempting to travel out of Singapore on Friday (Sep 29) afternoon. Businesstimes reported. https://t.co/W01HoeQYCu pic.twitter.com/TwvRuFKbxw
— Wu Blockchain (@WuBlockchain) September 29, 2023
The asset
freeze marks the latest downfall of formerly prominent crypto entrepreneurs. It
comes on the heels of FTX founder Sam Bankman-Fried’s conviction for fraud in
the US. The crypto sector has faced increased scrutiny around risky practices
as several major industry players have collapsed over the past year.
Singapore’s Court Investigates
Three Arrows Capital
The
Singapore court’s recent interrogation of Zhu marks a critical juncture in the
ongoing investigation into the firm’s collapse. This as a pivotal moment in the
liquidators’ quest to recoup $3.3 billion owed to creditors.
During the
two-day inquiry, the focus was on deciphering the complexities surrounding
3AC’s failure and locating its assets. Zhu and Davies face allegations from
liquidators of impeding the investigation. Their aim is to reclaim $1.3 billion
from the pair….
