3AC Liquidators on the Hunt for Three Arrows Capital Assets

Su Zhu blesses the High Court with his presence as liquidators Crumpler & Farmer ramp up the search for misplaced funds.

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  • 3AC co-founder Su Zhu appeared at Singapore’s High Court on Wednesday.
  • Crumpler & Farmer ordered 3AC’s executives to locate the remaining assets.
  • Teneo liquidators calculated over $3.3 billion in remaining debt to creditors.

Three Arrows Capital is back in the news today, as one part of the co-founding pair faced questions in Singapore about the collapse of their crypto hedge fund. Teneo, the court-appointed liquidation company, queried co-founder Su Zhu about the whereabouts of billions of assets that technically belonged to the fallen fund.

According to official court documents, the ‘Examination of Enforcement Respondent’ involved only one responsible party – Su Zhu. The cryptocurrency mogul was captured by Singaporean authorities on 29 September while boarding a plane to Dubai.

3AC liquidators Farmer & Crumpler have pursued Su Zhu and Kyle Davies for over a year. The pair launched a new debt-focused cryptocurrency platform called OPNX earlier this year.

The effort to retrieve the lost funds was partially successful. Several blue-chip NFTs were sold off in auctions. Some well-known names from Three Arrows Capital’s (3AC) fancy NFT collection include “The Goose,” which sold for a whopping $6.2 million in Sotheby’s auction house.

Dmitri Cherniak’s work of art went down in history as the second largest non-fungible token (NFT) sold as a physical artwork. More recently, Crumpler & Farmer transferred another 4.45 million DYDX. The transaction, worth $12.7 million at stamped time, was sent to Binance – likely to make whole with the affected customers on the platform.

3AC Founder To Be Released On Good Behavior?

The dramatic downfall of Three Arrows Capital (3AC) made a hole of $2 trillion in crypto assets, creating a domino effect on various partnering companies and other hedge funds. These include several large ships that sank: Celsius, Voyager Digital, and Genesis are among the largest, while 3AC also had substantial exposure to Terra Luna’s UST de-peg.

But the risky practices came to light: 3AC bet heavily on Staked Ether (stETH), based on the misconception that staked Ether should be pegged to Ethereum (ETH). While this was the expectation, tough times in 2022 proved that this is not exactly the case – Staked Ether momentarily de-pegged from Lido’s staking platform, causing a rapid sell-off.

Due to these mishaps, Singaporean authorities prohibited Su Zhu and Kyle Davies from conducting business within the Singaporean territory for nine years. Implemented in September, the ban precluded Su Zhu’s capture, but the tables will likely turn in Zhu’s favor.

An anonymous person familiar with the matter insisted that Su Zhu is slated to be released from jail this month for good behavior. The current court proceedings are a civil case, as neither Su Zhu nor Kyle Davies have been charged criminally. 

The details of Three Arrows Capital assets’ whereabouts will be shared between the creditors. Currently, the cumulative debt to creditors stands at $3.3 billion, which is 200 million less than the sum announced in July 2022, as a small portion of 3AC’s owned assets has been sold off in auctions.

On the Flipside

  • While Su Zhu serves four months in Singapore for “failing to cooperate in a meaningful way” with the court-appointed liquidators, Su Zhu and Kyle Davies stated on social media that good faith efforts of cooperating were “met with baiting.”

Why This Matters

Three Arrows Capital crypto hedge fund imploded in June 2022 after Terra Luna’s stablecoin collapse. The recouped funds are used towards settling debt and finding closure.

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Author
Tadas Klimasevskis

Tadas Klimaševskis is a Lithuanian journalist at DailyCoin, specializing in covering the lighter side of the crypto industry such as memecoins and pop culture in the metaverse. He has experience as a music artist, English language teacher, and freelance writer, and uses his creative writing skills to summarize valuable information in his work. He is also a strong believer in the potential of blockchain and spends his free time listening to music, traveling, and watching basketball games.