Three Arrows Capital used to be a good reputation crypto fund but then suffered heavily due to the crash of LUNA-UST, resulting in massive asset liquidation. As it turned out, the fund borrowed unsecured assets from many institutions, causing widespread influence on Voyager, Finblox, Genesis Trading, Babel Finance, DeFiance Capital, Blockchain.com, Deribit, Kyber Network, etc.
On July 2, 3AC filed for bankruptcy. Previously, the fund was ordered by creditors to liquidate assets in British Virgin Islands, where it is registered.
According to the most recent filing with the US Bankruptcy Court for the Southern District of New York, the lawyers involved in the proceeding said that the fund founders have not been cooperative in the proceedings so far, and their whereabouts are unknown.
“The foreign representatives understand and believe that while the debtor has had certain operations in Singapore, Mr Davies and Mr Zhu’s current location remains unknown. They are rumored to have left Singapore.”
The lawyers acting on behalf of the creditors also said that persons identifying themselves as the two co-founders attended an initial call via Zoom. However, with the duo’s video and audio turned off and their respective legal representative answering questions on their behalf, speculations emerged if they were actually present during the proceeding.
The duo’s “disappearance” is unexpected because at the time this fund defaulted on June 15, Su Zhu tweeted that he was “in contact with the relevant parties and committed to resolving the situation.”
Founder Kyle Davies also said in an interview on June 17 that he was considering options to liquidate assets or negotiate with creditors to have more time to sell USD. However, according to creditors and the fund insiders, Su Zhu and Kyle Davies both ignored or kept quiet when asked about the incident in early June.
The mysterious absence of the two founders has raised concerns about the dispersion of the fund’s assets and more disadvantages for creditors, especially since 3AC’s assets are mainly from crypto and NFT, which counts very high liquidity.
There has been a lot of speculation that Su Zhu and Kyle Davies are currently in Dubai, based on Zhu Su’s Twitter profile and the rumor that 3AC is about to move headquarters from Singapore to this Middle Eastern city.
Also, in recent days, Su Zhu is reported to sell his personal property in Singapore. His luxury mansion was purchased in December 2021 via a trust fund in the name of one of his children. It was put up for sale as a private deal for an undisclosed amount.
Three Arrows Capital is an investment fund founded by Su Zhu and Kyle Davies in 2012 with an initial capital of only $1 million. The fund’s asset value rose to $10 billion in early 2022, but most of that money seems to come from loans and unsecured capital. Kyle Davies said the total assets under management as of April 2022 are about $3 billion.
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