Three Arrows Founder Su Zhu Faces Probe in Singapore, Jail Release Soon

Su Zhu, the co-founder of bankrupt crypto hedge fund Three Arrows Capital, is facing questioning in the Singapore court for the first time today regarding the collapse of the hedge fund. This also gives liquidators a fair chance to gather information as they seek to recoup billions of dollars in lost funds.

Su Zhu Faces New Court Hearing

In a two-day court hearing this week, Zhu, the key figure behind the troubled hedge fund Three Arrows Capital, faced inquiries from Teneo, the appointed liquidator. Zhu, who had been arrested in Singapore on September 29 and subsequently jailed for four months for non-cooperation with the liquidation process, is set to be released this month. Reportedly, the 3AC founders have already been working on setting up a new crypto exchange GTX.

During the court session, lawyers for Teneo sought information on the fund’s failure and the location of its assets. Zhu acknowledged the questioning, appearing in the High Court, while his legal representative, the court, and the prison service remained silent on the matter. A spokesperson for Teneo declined to provide comments.

In 2022, Three Arrows faced a collapse due to the failure of leveraged bets, contributing to a $2 trillion cryptocurrency market downturn and triggering a series of collapses within the sector. Zhu and the fund’s co-founder, Kyle Davies, have been accused by liquidators of insufficient cooperation with the investigation. The liquidators aim to recover $1.3 billion from Zhu and Davies, while Teneo estimates that creditors are owed approximately $3.3 billion in total.

The interactions between Su Zhu and Teneo’s representatives constitute a civil matter, and both Zhu and Davies have not faced any criminal charges in Singapore. Information gleaned from the court’s questioning will be disclosed to creditors with the objective of maximizing potential recoveries, as reported by individuals familiar with the matter.

Co-operating With Liquidators

Zhu, in previous statements, has contended that his and Davies’ genuine attempts to cooperate with liquidators were met with provocations. Correspondence submitted to a New York bankruptcy court by the liquidators revealed that the counsel to Davies and Zhu labeled the court orders obtained by the liquidators as “baseless.”

In mid-September, Singapore’s central bank imposed nine-year prohibition orders on both individuals, citing risk management deficiencies and the provision of false information at Three Arrows. The fund, once considered one of the largest and most successful crypto hedge funds, relocated its registration to the British Virgin Islands following its collapse. Teneo was appointed by a British Virgin Islands court in June of the previous year to oversee the liquidation of the fund’s assets.