Three Arrows Capital co-founder Zhu arrested in Singapore airport, sentenced four months in prison
The hedge fund’s other co-founder Kyle Davies is also being called for arrest and imprisonment
10:36 PM GMT+8•September 29, 2023
The liquidators behind Three Arrows Capital (3AC), the now-defunct crypto hedge fund, shared that the firm’s co-founder Su Zhu was arrested in Singapore at the Changi Airport while trying to leave the country.
Teneo, a financial advisory firm controlling the liquidation and management of affairs for the defunct crypto hedge fund, said it got a “committal order” against Zhu after he failed to comply with court orders to cooperate with the liquidation investigation. The order sentenced Zhu to four months in prison, according to a statement.
The advisory firm added that a similar committal order was granted against the other 3AC co-founder, Kyle Davies, who is also being called for four month imprisonment. Davies’ whereabouts remain unknown, according to Teneo.
For context, the firm once managed an estimated $10 billion in assets and was a major entity among crypto market players. In July 2022, 3AC filed for Chapter 15 bankruptcy in New York.
The hedge fund’s prior insolvency forced major crypto players to rearrange their operations and limit customer withdrawals amid a crypto sell-off that seemed to catch plenty of mega firms off guard at the time, after the collapse of the Terra/LUNA project.
A Founder of the Crypto Hedge Fund Three Arrows Capital Is Arrested
Su Zhu, a founder of Three Arrows Capital, a cryptocurrency hedge fund that collapsed last year, was arrested in Singapore.
Sept. 29, 2023
Su Zhu, a founder of the cryptocurrency fund Three Arrows Capital, was arrested on Friday in Singapore while trying to leave the country, the liquidators of the company said.
Mr. Zhu, 36, was arrested at Changi Airport, the liquidators said. A Singaporean court on Monday had issued what are known as “committal” orders for Mr. Zhu and another Three Arrows founder, Kyle Davies, sentencing both to four months in prison after they failed to cooperate with the liquidators investigating their failed hedge fund. Mr. Davies’s location is unknown, according to Teneo, the firm that is working on the fund’s liquidation.
Last summer, Three Arrows, which is based in Singapore and managed $4 billion at its peak, filed for bankruptcy after the cryptocurrency markets melted down. When the fund collapsed, a large swath of the industry was dragged down with it. The ensuing crisis drained the savings of millions of amateur investors and plunged other companies into bankruptcy.
Mr. Zhu is the latest crypto executive to be arrested after the crypto market plunged last year.
In December, Sam Bankman-Fried, the founder of the crypto exchange FTX, was arrested in the Bahamas and later charged with orchestrating a sweeping fraud involving his company. His criminal trial begins in a federal court in Manhattan on Tuesday.
In March, Do Kwon, the founder of the crypto company Terraform Labs, was arrested in Podgorica, the capital of Montenegro, as he and a travel companion tried to board a private flight to Dubai, United Arab Emirates. He has also been charged with fraud.
A lawyer for Mr. Zhu didn’t immediately respond to a request for comment.
In a statement, Teneo said it would “pursue all opportunities” to ensure that Mr. Zhu “complies in full with the court order made against him for provision of information and documents” relating to Three Arrows during his imprisonment.
After Three Arrows collapsed, Mr. Zhu and Mr. Davies denied wrongdoing and went traveling. Mr. Davies spent time in Spain, Bali and elsewhere. Mr. Zhu played video games and found a surf instructor. In April, they unveiled a new business, Open Exchange, a marketplace for investors who had lost money during last year’s crypto implosions.
The Monetary Authority of Singapore, a regulator that reprimanded Three Arrows last June, prohibited Mr. Zhu and Mr. Davies from conducting regulated investment activity for nine years, effective Sept. 13, the liquidators added.
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