Over the past few days, the community has been inundated with information about Zhu Su and Kyle Davies, the two men behind Three Arrows Capital (3AC). Rumors circulated that the founders had dropped off the radar, departing Singapore after allegedly fleecing creditors’ assets.
“Catch Me If You Can”
In June, facing a severe financial problem, 3AC filed for Chapter 15 bankruptcy protection in the Southern District of New York. With this filing, the British Virgin Islands court ordered its New York-based partner Teneo restructuring to deal with the firm’s liquidation.
The firm’s purpose of conducting bankruptcy proceedings is to create fair repayments for the creditors. Bankruptcy procedures involve the participation of the asset management and liquidation team and the Court.
However, according to court records, Three Arrows Capital’s lawyers and liquidation agents have no idea where those founders are, despite the fact that both parties are still in contact.
There were rumors that Zhu Su and Kyle Davies had abandoned their headquarters.
Although Zhu Su and Kyle Davies first attended an online meeting to discuss the next legal steps, they did not open their cameras, muted the mic, refused to answer questions from the liquidator, and had a non-cooperative approach, according to the liquidation appointee’s statement.
The liquidator also asserted that they do not know where Zhu Su and Kyle Davies are currently located, expressing concern that the two founders will fleece the fund’s assets and disadvantage the creditors, especially since Three Arrows Capital’s assets include cash, cryptocurrencies, and NFTs, which have high liquidity.
Based on Zhu Su’s Twitter profile and reports that Three Arrows Capital plans to relocate its headquarters from Singapore to Dubai, there has been widespread speculation that the two figures are currently in Dubai.
The liquidator’s legal representative also sent a photo of Three Arrows Capital’s Singapore office, which was locked and sealed, with several letters on the floor but no receivers.
Zhu Su Broke Silence
Shortly after the liquidators’ claims, Su Zhu, CEO of 3AC, finally broke the silence on July 12 through a tweet. The co-founder said that all blame against the crypto hedge fund was a setup staged by partner companies. It’s also been Zhu’s first public statement since June 15.
Zhu posted an email image sent to the liquidators’ legal representatives of a Singapore-based firm by Advocatus Legal LLP, a law firm acting on behalf of 3AC.
According to one of the letters, Kyle Davies, the other fund’s co-founder, and Su were chosen by Russell Crumpler and Christopher Farmer, liquidation appointees selected under the British Virgin Islands court’s order.
Details from the emails Zhu revealed suggest that the liquidators’ current activity, as well as the manner in which court filings have progressed thus far, are both unsatisfactory.
The screenshot also demonstrates that hedge firms are willing to work with liquidators to pay their obligations in a respected manner.
Threats to the families of 3AC employees were also included in the email screenshot:
“Please let us know if you stated in your Court filings that we explained that our clients, and their families have received threats of physical violence, and have had to field queries from the Monetary Authority of Singapore in the last week, or so, which has meant that they have been working under a lot of time pressure.”
While the first screenshot is proof that 3AC might be falsely accused, the second one has more important information – 3AC’s deal with Israeli crypto startup StarkWare. This raises the question of whether 3AC liquidators will exercise the right to purchase StarkWare tokens.
While the first screenshot shows that 3AC may have been falsely accused, the second has more vital information: 3AC’s agreement with Israeli cryptocurrency company StarkWare. This brings up the question of whether the 3AC liquidators will activate their option to buy StarkWare tokens.
Despite the fact that the founder of Three Arrows Capital has spoken out, the community’s reaction has been negative. Many people argued that Zhu’s evidence lacked credible and useful information. Some people believe Zhu Su is simply playing the victim.