Su Zhu, the co-founder of Three Arrows Capital (3AC), was arrested in Singapore while attempting to leave the country, according to Teneo, the joint liquidator of the bankrupt hedge fund. The arrest followed a committal order granted by the Singapore Courts, which was issued against Zhu for failing to comply with a court order. The investigation is connected to the collapse of the $10 billion hedge fund in 2022, which was caused by the implosion of the Terra ecosystem. Zhu and fellow co-founder Kyle Davies have been on the run from liquidators since the fund’s failure, but Zhu has now been sentenced to four months’ imprisonment.
The collapse of the hedge fund was a result of excessive leverage on long positions in cryptocurrencies and significant borrowings from a crypto lending protocol. Liquidators are attempting to recover funds for creditors of 3AC, and Zhu’s arrest is meant to facilitate engagement with him regarding the recovery of assets belonging to the fund. The liquidators are also seeking his compliance with the court order for providing information and documents related to 3AC and its former investment manager. It remains unknown where Davies is located, and both individuals have been prohibited by the Monetary Authority of Singapore from conducting regulated investment activity for nine years each.
In summary, Su Zhu, co-founder of Three Arrows Capital, has been arrested in Singapore for failing to comply with a court order. The hedge fund’s collapse was caused by excessive leverage and borrowings from a crypto lending protocol. The liquidators are focusing on recovering assets and engaging with Zhu during his four-month imprisonment. Kyle Davies, the other co-founder, is still missing, and both individuals have been banned from conducting regulated investment activity for nine years by the Monetary Authority of Singapore.