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

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Where in the world are Su Zhu and Kyle Davies? The founders of cryptocurrency hedge fund Three Arrows Capital (3AC) cannot be found, according to officials tasked with liquidating the bankrupt firm (via Reuters). According to a court document filed Friday, the whereabouts of Zhu and Davies are currently unknown, and his liquidators say they have received “no meaningful cooperation” from either of them.

Singapore-based 3AC filed for Chapter 15 bankruptcy earlier this month, a move aimed at protecting foreign companies’ assets from creditors in the United States. News of the bankruptcy filing surfaced after 3AC defaulted on a $670 million loan from crypto broker Voyager Digital, which has also since filed for bankruptcy. 3AC also allegedly failed to repay $270 million to crypto exchange Blockchain.com. A court in the British Virgin Islands has appointed corporate management company Teneo to oversee the liquidation of 3AC.

Russell Crumpler and Christopher Farmer, two senior directors of Teneo, say they were unable to get in touch with Zhu and Davies. In the court filing, Crumpler and Farmer allege they joined a Zoom call with “people identifying themselves as ‘Su Zhu’ and ‘Kyle,’ but ‘their video was turned off and they were on mute at all times. , neither of them speaking despite being asked questions directly.

During the Zoom call, the two founders instead communicated through representatives of a Singapore-based legal agency. Farmer alleges he even tried to locate Zhu and Davies at 3AC’s headquarters in Singapore – only to find a locked door and a stack of unopened mail. The filing notes that Zhu may be trying to sell his $35 million mansion in Singapore, citing various rumors.

Crumpler and Farmer say there is an “imminent risk” that the duo will attempt to transfer the company’s remaining funds elsewhere. “Here, this risk is heightened because a substantial portion of the debtor’s assets are comprised of cash and digital assets, such as non-fungible cryptocurrencies and tokens, which are readily transferable,” the filing said. “Foreign representatives [Teneo]the debtor [3AC]and its creditors as a whole would be irreparably harmed if a disposition of the debtor’s assets were to occur during the interim period. »

The sudden disappearance of Davies and Zhu is not that unusual in the crypto world. Users struggled to sue Binance last year after the stock market halted as Bitcoin plunged in value…because they couldn’t quite figure it out how to file a complaint. And in another bizarre case, Gerald Cotten, CEO of QuadrigaCX, died and his clients’ funds, valued at around $250 million, disappeared. (Mysteriously, former Quadriga executive Michael Patryn went on to found the Wonderland DeFi protocol.)

As noted Reuters, the court has scheduled an emergency hearing for Tuesday, July 12 to deal with 3AC’s situation. The collapse of major cryptocurrency companies like 3AC has caused a lot of damage to the crypto market that has probably not yet been fully realized. Crypto lending firms Babel Finance and Celcius were also rocked by the turbulent market, with both firms freezing transactions amid a “crypto winter”.

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