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Liquidators for Crypto Hedge Fund Three Arrows Capital Can’t Find Founders

Liquidators for Crypto Hedge Fund Three Arrows Capital Can’t Find Founders
Source: Verge

Su Zhu and Kyle Davies are missing; where are they? Officials in charge of liquidating the insolvent business Three Arrows Capital (3AC) claim that the founders of the bitcoin hedge fund are nowhere to be found (via Reuters).

Zhu and Davies’ locations are now unknown, according to a court filing submitted on Friday, and its liquidators claim they have not received “any substantial assistance” from the two. A judge gave complete custody of 3AC’s assets to its liquidators on Tuesday, banning them from withdrawing any funds from their accounts.

This month, the Singapore-based 3AC filed for Chapter 15 bankruptcy in an effort to shield the assets of overseas corporations from US creditors. After 3AC fell behind on a $670 million loan from cryptocurrency broker Voyager Digital, which has now filed for bankruptcy, news of the bankruptcy filing came. According to reports, 3AC also didn’t pay Blockchain.com’s cryptocurrency exchange $270 million. Teneo, a business management firm, has been charged by a British Virgin Islands court with managing 3AC’s liquidation.

Two senior directors of Teneo, Russell Crumpler and Christopher Farmer, assert that they have been unable to contact Zhu and Davies. Crumpler and Farmer claim in the court document that they joined a Zoom conversation with “people identifying themselves as ‘Su Zhu’ and ‘Kyle,'” but that “their video was switched off and they were on silent at all times, speaking neither of them despite queries being directly addressed to them.”

The Advocatus and Solitaire officials from the Singapore-based law firm spoke on behalf of the two founders during the Zoom conversation. Farmer claims that he even attempted to locate Zhu and Davies in the Singapore office of 3AC, but was met with a locked door and a stack of unread mail. According to several speculations mentioned in the petition, Zhu may be attempting to sell his $35 million property in Singapore.

There is a “imminent risk,” according to Crumpler and Farmer, that they would try to move the company’s remaining money. The complaint states that the danger is increased since a sizable amount of the debtor’s assets are made up of cash and easily transferable digital assets like cryptocurrencies and non-fungible tokens. “Any sale of the Debtor’s assets during the provisional period would be irrevocably harmful to the Foreign Representatives [Teneo], the Debtor [3AC], and its creditors generally.”

Following the filing by Crumpler and Farmer, Zhu charged the liquidators with “baiting.” Christopher Anand Daniel, a representative of Solitaire and Advocatus, claims the liquidators were “keen to ask if the discussions were on a “without prejudice basis”” so they “could use the discussions in Court filings without notice to” Zhu and Davies. Zhu posted two screenshots of email correspondence between Crumpler and Daniel, along with a statement from Crumpler.

Therefore, contrary to your claims that you were attempting to engage our clients in a productive manner and in good faith, it appears that you had already planned to submit that application and were, in fact, luring our clients, says Daniel. He continues by saying that in addition to working under a lot of time pressure to respond to inquiries from the Monetary Authority of Singapore, the founders and their families have “received threats of physical assault.”

It is said that Davies and Zhu were not very cooperative with the liquidators, which is the reason cited. The fact that Daniels refuses to take part in a phone conversation on their behalf indicates that they still have no intention of meeting with Teneo’s agents. We’ll let you know when our clients may expect to talk with you depending on how you respond.

The apparent disappearance of Davies and Zhu is not very rare in the cryptosphere. Last year, after the exchange stopped trading as the price of Bitcoin fell, users found it difficult to sue Binance since they couldn’t really figure out how to do it. Gerald Cotten, the CEO of the cryptocurrency exchange QuadrigaCX, passed away, and his clients’ funds—worth roughly $250 million—went missing. Michael Patryn, a former executive of Quadriga, mysteriously invented the Wonderland DeFi protocol.

The crypto industry has likely not yet fully recovered from the harm inflicted by the failure of significant coin companies like 3AC. Babel Finance and Celcius, two crypto lending providers, have both been impacted by the volatile market, suspending transactions in the middle of a “crypto winter.”