One of the co-founders of the cryptocurrency hedge fund Three Arrows Capital, which collapsed last year, has been apprehended and sentenced to four months in jail in Singapore. This development comes as a result of the fund’s liquidation process, during which it suffered significant losses due to a sharp decline in crypto asset prices. Su Zhu, the co-founder in question, was detained at Changi Airport in Singapore while attempting to leave the country, as confirmed by Three Arrows’ liquidator, Teneo.
The Background
Three Arrows Capital, based in Singapore, filed for bankruptcy when its investments faced substantial losses following a major sell-off of crypto assets amid a market downturn.
Legal Action and Imprisonment
Teneo, overseeing the liquidation process, stated that they had obtained a committal order against Su Zhu for his non-cooperation with their investigation into the company’s failure. This committal order resulted in a four-month prison sentence for Zhu. His co-founder, Kyle Davies, also received a similar sentence but is currently unaccounted for.
Regulatory Sanctions
The Monetary Authority of Singapore (MAS) had previously banned both Zhu and Davies from engaging in regulated investment activities for nine years each. This action by MAS followed their involvement in the collapse of Three Arrows Capital.
Efforts to Recover Funds
The liquidator, appointed by a court in the British Virgin Islands, is working diligently to recover the assets of Three Arrows Capital and ensure that creditors receive returns after the fund’s failure. However, the liquidator has accused Zhu and Davies of hindering the recovery process by not cooperating and failing to provide necessary information voluntarily.
On the Run
In a profile featured in The New York Times in June, both Zhu and Davies claimed to have been traveling since the hedge fund’s collapse. They mentioned visiting various locations, including the Indonesian resort island of Bali, where they engaged in activities such as surfing and meditation.
Response and Ongoing Investigation
Singapore police have not yet issued a public statement regarding this arrest and imprisonment.
The arrest and imprisonment of Su Zhu, along with the ongoing investigation and legal actions, underscore the regulatory challenges and legal consequences that can arise in the cryptocurrency industry, especially when fund collapses and investor assets are at stake.