Singapore's Court Investigates 3AC’s Co-Founder in $3B Legal Tussle

<p>The Co-Founder of the collapsed crypto lending platform Three
Arrows Capital (3AC), Su Zhu, has been questioned in a court in Singapore.
This investigation, as reported by Bloomberg, marked a significant step in the
search for a solution by the company's liquidators seeking to recover $3.3 billion for
creditors. </p><p>This interrogation, which was conducted for two
days, sought to unravel the mysteries surrounding the collapse of 3AC and the
whereabouts of its assets. The liquidators have accused Zhu and his Co-Founder, Kyle Davies, of obstructing investigations, aiming to recover $1.3 billion from
the duo.</p><p>Zhu's interrogation, conducted by lawyers
representing the liquidator Teneo, delved into the failure of <a href="https://www.financemagnates.com/tag/3ac/" target="_blank" rel="follow">3AC</a> and the
loss of customers’ assets. Despite the private nature of the proceedings, the
media publication reported, citing insiders, that Zhu's detainment in September
played an important role in the inquiries.</p><p>Liquidators Target $1.3 Billion Recovery from Zhu
and Davies</p><p>Liquidators have accused Zhu and Davies of
obstructing investigations, aiming to recover a staggering $1.3 billion from
the duo. However, neither Zhu nor Davies have faced criminal charges in
Singapore. The information obtained from these inquiries is poised to be shared
with creditors.</p><p>In September, <a href="https://www.financemagnates.com/cryptocurrency/singapore-authorities-arrest-co-founder-of-3ac-in-bankruptcy-case/" target="_blank" rel="follow">Zhu was arrested in Singapore</a>,
culminating in the downfall of 3AC. The charges brought against him include alleged
mismanagement of customers' funds and debt default. Before the collapse of the
crypto lender, 3AC boasted investments in high-profile projects like LUNA,
Aave, Avalanche, BlockFi, Deribit, and Solana. However, its troubles began with
the crash of LUNA in May, triggering a cascading effect in the crypto
industry.</p><blockquote><p lang="en" dir="ltr">Breaking: ZHU Su, co-founder of failed crypto hedge fund Three Arrows Capital, was apprehended at Changi Airport whilst attempting to travel out of Singapore on Friday (Sep 29) afternoon. Businesstimes reported. <a href="https://t.co/W01HoeQYCu">https://t.co/W01HoeQYCu</a> <a href="https://t.co/TwvRuFKbxw">pic.twitter.com/TwvRuFKbxw</a></p>— Wu Blockchain (@WuBlockchain) <a href="https://twitter.com/WuBlockchain/status/1707759279531250121?ref_src=twsrc%5Etfw">September 29, 2023</a></blockquote><p>3AC's Regulatory Setback</p><p>Despite managing $18 billion in cryptocurrency
assets at its peak, 3AC failed to meet margin calls in June last year, raising doubts
about its financial stability. In response to regulatory lapses tied to the
operation of the fund, the Monetary Authority of Singapore <a href="https://www.financemagnates.com/cryptocurrency/singapore-bans-three-arrows-capital-founders-for-nine-years/" target="_blank" rel="follow">banned the duo</a> from participating in the city-state's financial services sector for
nine years.</p><p>The financial watchdog affirmed that
neither Zhu who held the position of Chief Executive Officer, nor Kyle Livingston
Davies, the Chairman of 3AC, could engage in management roles or act as directors in any capital market services firm in Singapore.</p><p>Founded in 2012, 3AC's downfall extended far beyond
its immediate stakeholders. The rival crypto lender Voyager Digital was unable to
recover its debt from the company, leading to its <a href="https://www.financemagnates.com/terms/b/bankruptcy/">bankruptcy</a>. This event caused a domino effect
with damages exceeding $3 billion, impacting several companies in the crypto
space.</p>

This article was written by Jared Kirui at www.financemagnates.com.