Three Arrows Capital Co-Founder Su Zhu Arrested Amid Probe into Hedge Fund Collapse
Summary:
Su Zhu, co-founder of the bankrupt hedge fund Three Arrows Capital (3AC), was arrested while trying to exit Singapore following a court-issued committal order. The detention is part of efforts to recover funds for 3AC's creditors after the fund's collapse in 2022. Zhu and fellow co-founder, Kyle Davies, despite being active on social media, have been avoiding liquidators. While Zhu is sentenced to a four-month prison term, Davies' location remains unknown. Both have been barred from regulated investment activities for nine years by the Monetary Authority of Singapore.
Su Zhu, one of the founding members of Three Arrows Capital (3AC), was detained at Singapore's Changi Airport while trying to exit the country. The incident was reported to Cointelegraph by Teneo, the firm currently overseeing the liquidation of the now-bankrupt hedge fund. According to a declaration by Teneo, Zhu was taken into custody following a committal order from Singapore's court system.
A committal order is a court directive oftentimes used as a penalty for contempt of court. Teneo secured such an order against Zhu in Singapore on September 25, alleging that Zhu failed to adhere to an earlier court directive.
The investigation is connected to the recovery process for the creditors of 3AC. The hedge fund, once worth $10 billion, went bankrupt in 2022 after the collapse of the Terra ecosystem. 3AC was overly leveraged on long positions in a diverse crypto portfolio and had incurred debt in the hundreds of millions from a crypto lending service. Since the fund's collapse, Zhu and fellow co-founder, Kyle Davies, have evaded liquidators, despite maintaining an active social media presence.
Singapore's courts have sentenced Zhu to a four-month prison term through the committal order. On the same note, Davies is also under a similar order. Teneo has thus stated, "Mr. Zhu will serve his four-month sentence under the committal order. During this period, the liquidators will liaise with Zhu about 3AC-related issues, particularly focused on asset recovery - assets linked to 3AC or procured using its funds. The liquidating agents will use all available remedies to ensure Zhu's full compliance with the court order, demanding disclosure of information and documents pertaining to 3AC and its erstwhile investment manager, throughout his sentence and post-release. If needed, further court orders may be sought."
As of now, Davies’ location is yet unknown. The Monetary Authority of Singapore has halted Zhu and Davies from engaging in regulated investment activity for a period of nine years each.
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Published At
9/29/2023 2:39:52 PM
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