3AC Co-founder Su Zhu Faces Intense Questioning from the Liquidators

The downfall of the Singapore-based hedge fund Three Arrows Capital (3AC) doomed the hopes of many crypto investors who had invented their hard-earned funds on the platform. Following the unprecedented collapse of 3AC, the co-founder of the now-defunct hedge fund, Su Zhu, has faced multiple legal charges.

In a recent court proceeding, the lawyer representing the 3AC liquidators turned nosy in the attempt to recover the billion dollars lost in crypto investment.

3AC Co-founder Appears in Court for Questioning

The court report demonstrated that Zhu responded to multiple questions from the legal team concerning the rise and fall of 3AC.

A source privy to the information revealed that the New York-based advisory firm Teneo requested the disgraced crypto investor highlight on the financial mistakes made by the 3AC. The Teneo team also demanded Zhu to brief the court on where  billion dollars of customers’ funds went. The question arose from the $1.3 billion lost in the Zhu-led crypto hedge fund.

The collapse of the crypto hedge fund dragged Zhu’s business partner and co-founder of 3AC, Kyle Davies, to a slew of legal charges. The two crypto investors are expected to disclose the whereabouts of customers’ funds and $3.3 billion creditors’ assets.

In June last year, 3AC was among the firms affected by the collapse of the Bahamian crypto exchange FTX. The troubled hedge fund had invested heavily in Terra, which entered an unprecedented death spiral last year. Before the fallout of Terra, the lending platform co-founder Do Kwon had established a solid relationship with 3AC’s top-level executives.

3AC Liquidators Intensify the Hunt for Assets

The collapse of 3AC exposed the investors to a loss of substantial amounts. Following the unprecedented fallout of the hedge fund, Zhu and Davies received threats from the disgraced crypto investors, forcing them to go into hiding. Months after the hedge fund filed for bankrupt protection, Zhu was arrested in Singapore when attempted to flee the country.

The arrest of the 3AC co-founder forced the law enforces to take decisive action to arrest his business partner, Davies, whose whereabouts were still unknown. The arrest of the two crypto fugitives was followed by a four-month imprisonment to recover the customer’s funds.

Regulators Step Up to Assist Recovery of Funds from 3AC

A report from Bloomberg demonstrated that Zhu and Davies imprisonment was due their defiance behaviours in the ongoing investigation. The report argued that if the two investors agreed to cooperate with the law enforcers after serving their jail term, the court might reconsider the decision for their release.

In a subsequent report, the government agency in charge of investment, the Monetary Authority of Singapore (MAS), levied restrictive measures preventing the two from establishing investments for nine years. The MAS restricted the two officials from engaging in any financial activity in Singapore.

Reportedly, the MAS precaution measures emanated from the collapse of 3AC and the failure of the hedge fund to embrace proper risk management tools for trading digital assets.

Editorial credit: T. Schneider / Shutterstock.com

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