Three Arrows Capital’s Su Zhu Faces Court Scrutiny in Asset Recovery Effort

Legal Proceedings Intensify for Three Arrows Co-Founder

Su Zhu, co-founder of Three Arrows Capital, recently faced a rigorous examination in a Singapore court regarding the cryptocurrency fund’s downfall. This development provides liquidators, led by Teneo, a vital opportunity to uncover information crucial for recovering billions owed to creditors.

Court Inquiries into Fund’s Collapse

During a two-day hearing, Zhu was required to answer queries posed by Teneo’s legal representatives, sources report. Key questions revolved around the fund’s failure and the current location of its assets. These proceedings, held privately, were a result of Zhu’s earlier apprehension at a Singapore airport and subsequent four-month imprisonment for non-compliance with the fund’s liquidation process. Zhu, due for release this month, appeared in court in a formal suit, though his legal team remained silent on the matter, as did the court and prison service. Teneo also refrained from commenting.

The Downfall of Three Arrows and Subsequent Legal Actions

Three Arrows Capital’s implosion in 2022 was a significant catalyst in the wider $2 trillion crypto market crash, resulting in numerous sector collapses. Liquidators have since accused Zhu and fellow co-founder Kyle Davies of uncooperative behavior, aiming to reclaim $1.3 billion from them, with overall creditor debts totaling approximately $3.3 billion.

Civil Proceedings and the Quest for Recovery

While the proceedings between Zhu and Teneo are civil, no criminal charges have been filed against Zhu and Davies in Singapore. Information from the court’s inquiries is set to be disseminated to creditors, aiding in maximizing asset recovery. Zhu has previously criticized the liquidators’ approach, describing it as deceptive.

Three Arrows’ Regulatory Repercussions

Singapore’s central bank imposed nine-year prohibition orders on Zhu and Davies, citing risk management failures and misinformation. The fund, once a top player in the crypto hedge fund scene, moved its registration to the British Virgin Islands from Singapore before its collapse. Teneo was appointed by a court in the British Virgin Islands for asset liquidation in June last year.

The Search for Kyle Davies

Amidst the legal tussles, efforts to locate Davies continue, with liquidators collaborating with global authorities. Zhu and Davies, once celebrated figures in the crypto bull market, now face the consequences of the industry’s shift from boom to bust.