Su Zhu, co-founder of Three Arrows Capital, underwent questioning in a Singapore court for the first time regarding the collapse of the crypto fund.
After being arrested in Singapore in September 2023 while attempting to flee the country, Su Zhu is reportedly set to be released this month . The arrest occurred after a local court sentenced him to four months of imprisonment. Zhu underwent an extensive interrogation in a Singapore court, which likely contributed to the legal proceedings and the decision for his release.
The two-day court hearing , conducted by liquidators from Teneo, aimed to gather information on the circumstances leading to the fund’s failure and the location of its assets.
Those familiar with the matter revealed lawyers for the liquidator sought details during the questioning. The information gathered will be crucial as the liquidators attempt to recover billions of dollars for creditors involved in the case.
Approval for questioning was granted earlier after Zhu’s arrest at Singapore airport on September 29. He was subsequently jailed for four months for failing to cooperate with the task of winding up Three Arrows Capital. People familiar with the matter say Zhu will be released this month based on good behavior.
The collapse of Three Arrows in 2022, triggered by leveraged bets gone wrong, contributed to a $2 trillion crypto market downturn and several other collapses in the sector . Liquidators accuse Su Zhu and the fund’s other founder, Kyle Davies, of not meaningfully cooperating with their investigation. The liquidators aim to recover $1.3 billion from Zhu and Davies, and Teneo estimates that creditors are owed approximately $3.3 billion in total.
Ongoing proceedings between Zhu and Teneo’s representatives are a civil matter. Neither Zhu nor Davies have faced any criminal charges in Singapore. Details obtained from questioning in court will be shared with creditors, with the objective of maximizing recoveries from the fund’s collapse.
Zhu has asserted that his and Davies’ efforts to cooperate with liquidators were met with baiting. Email correspondence submitted to a New York bankruptcy court by the liquidators reveals that counsel to Davies and Zhu argued that the court orders obtained by the liquidators are baseless.
In mid-September, Singapore’s central bank imposed nine-year prohibition orders on both Zhu and Davies. It cited risk management failings and the provision of false information at Three Arrows Capital. This action further underscores the challenges and scrutiny faced by the founders in connection with the fund’s operations.
Before its collapse, Three Arrows was one of the largest and most successful crypto hedge funds. After previously operating out of Singapore, it shifted registration to the British Virgin Islands. In June of the preceding year, a court in the British Virgin Islands appointed Teneo to liquidate the fund’s assets.
The crypto industry saw Zhu and Davies as heroes during the pandemic-era bull run. Their reputations fell as the boom turned to bust. Liquidators are reportedly coordinating with authorities globally to locate Kyle Davies . The collapse of Three Arrows highlights the challenges and risks faced by prominent figures in the cryptocurrency industry.