- A new affidavit penned by a Three Arrows Capital liquidator heavily criticizes the hedge fund’s founders refusal to engage with either creditors or liquidators.
- Liquidators are concerned Su Zhu and Kyle Davies, the founders of the company, plan to liquidate their assets without taking their creditors into account.
- The company’s legal counsel has stated the “radio silence” was due to threats made against Su and Davies’ families.
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Liquidators are criticizing Three Arrows Capital’s lack of communication and fear the hedge fund’s directors may be planning to liquidate their assets to put them “beyond the reach” of their creditors.
Refusal to “Meaningfully Engage (or Engage at All)”
It would seem that Three Arrows Capital (3AC) isn’t cooperating with its liquidators.
According to a 1157-page affidavit penned by liquidator Russel Crumpler and uploaded online today by consulting firm Teneo, Su Zhu and Kyle Davies, the founders and managers of crypto hedge fund Three Arrows Capital, have “refused to meaningfully engage (or engage at all)” with their creditors and liquidators. Of particular concern for Crumpler are signs that Su may be “taking steps” to sell his assets in order to put them “beyond the reach of the company’s creditors.”
Crumpler revealed that neither Davies nor Su had communicated with liquidators since their appointment on June 27 despite the fact that 3AC had filed for liquidation itself. In fact, Crumpler indicated Su and Davies had put 3AC into liquidation without notifying the company’s other director, Mark James Dubois, or their creditors.
Liquidators found the 3AC Singapore office unoccupied and locked on June 30. After reaching out multiple times to former 3AC solicitors and to Davies and Su themselves, they were able to obtain a Zoom call with lawyers on July 6, during which “persons identifying themselves as ‘Su Zhu’ and ‘Kyle’” were present, though on mute and with cameras off.
3AC is a crypto hedge fund that grew into a multi-billion dollar establishment. Its founders became prominent in the crypto space for pushing the “supercycle” theory, arguing that Bitcoin would never experience such severe drawdowns again. The firm was reportedly wiped out following a brutal crypto market meltdown.
Crumpler also attested that the company had transferred $31.6 million in cryptocurrencies to Tai Ping Shan Limited, a company located in the Cayman Islands, and $10.9 million to an anonymous wallet. He indicated being “unclear” as to where these funds subsequently went.
He further criticized Su and Davies for failing to address liquidators’ concerns that company funds were used for “extravagant personal purchases.” Crumpler believes Su and Davies may have made a down-payment for a $50 million yacht with borrowed funds and pointed out signs suggesting that Su may be looking to sell one of his multi-million dollar properties in Singapore. According to Crumpler, three more individuals (one identified, two anonymous) have access to various company portfolios.
3AC counsel explained the radio silence was due to “alleged threats directed at [Davies’ and Su’s] families,” as well as 3AC’s founders’ cooperation with the Singaporean central bank after being reprimanded for providing it false information.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.