Cryptocurrency hedge fund liquidators Three Arrows Capital say they can’t find founders
Where in the world are Su Zhu and Kyle Davies? The founders of cryptocurrency hedge fund Three Arrows Capital (3AC) have not been found anywhere, according to officials charged with liquidating the bankrupt company (via Reuters). According to the court document filed on Friday, the whereabouts of Cho and Davis are currently unknown, and liquidators say they received “no meaningful cooperation” from the two.
Singapore-based 3AC filed for Chapter 15 bankruptcy earlier this month, a move aimed at protecting foreign corporate assets from creditors in the United States. News of the bankruptcy filing surfaced after 3AC defaulted on a $670 million loan provided by crypto broker Voyager Digital, which has since also filed for bankruptcy. 3AC has reportedly failed to pay $270 million to crypto-exchange platform Blockchain.com. The BVI court has commissioned business management company Teneo to oversee the liquidation of 3AC.
Russell Crumpler and Christopher Farmer, two of Teneo’s senior managers, claim they were unable to contact Zhu and Davies. In the court filing, Krumbler and Farmer claimed they joined a Zoom call with “people identifying themselves as ‘Su Zhu’ and ‘Kyle’, but ‘their video playback was turned off and they were on mute at all times with neither of them speaking despite than asking them questions directly.
During the Zoom call, the two founders communicated through representatives from a Singapore-based legal agency instead. Farmer claims he even tried to locate Zhu and Davies at 3AC’s Singapore headquarters – only to find a locked door and a pile of unopened mail. Recording notes Zhu may be trying to sell his $35 million mansion in Singapore, citing various rumors.
Krumbler and Farmer claim there is an “imminent risk” that the duo will attempt to divert the company’s remaining funds elsewhere. The deposit reads: “Here, this risk increases because a significant portion of the debtor’s assets consist of cash and digital assets, such as cryptocurrencies and non-fungible tokens, that can be easily transferred.” Overseas representatives [Teneo]debtor [3AC]and its creditors as a whole will be irreparably damaged if any disposition of the debtor’s assets occurs during the interim period.”
The sudden disappearance of Davis and Chu was not unusual in the cryptocurrency world. Users struggled to sue Binance last year after the exchange halted trading while the value of Bitcoin plummeted… because they couldn’t find out the truth how to sue. And in another case of strangeness, Gerald Cotten, CEO of the cryptocurrency exchange, died, and his clients’ money, estimated at $250 million, was lost. (Mysteriously, Michael Patrin, a former Quadriga CEO, went on to found the Wonderland DeFi protocol.)
As noted before Reuters, the court has set an emergency hearing scheduled for Tuesday, July 12 to address 3AC’s situation. The collapse of major crypto companies like 3AC has caused a lot of damage to the cryptocurrency market which is likely not fully realized yet. Crypto-lending firms Babel Finance and Celcius have also been affected by the turbulent market, with the two firms freezing transactions amid the “crypto winter.”