- Su Zhu, 3AC co-founder, has been arrested while trying to escape the country at Changi airport
- Zhu will serve 4 months in prison following a committal order
- Kyle Davies is still on the run and will also serve 4 months in prison when found
Three Arrow Capital(3AC) cofounder, Su Zhu has been arrested in Singapore at the Changi Airport as he was attempting to leave the country. The arrest was confirmed by Teneo, the liquidation firm in charge of liquidating 3AC’s assets following its implosion.
According to reports, Teneo received a “committal order” against Zhu after he refused to cooperate with the liquidation investigation as ordered by the court. As a result, Zhu had been sentenced to four months in prison, prompting his attempt to escape.
“Su Zhu was apprehended at Changi Airport whilst attempting to travel out of Singapore following a committal order by the Singapore courts against him,” Teneo said in a statement to Decrypt.
“Mr. Zhu will be held in prison to serve his sentence for four months,” the firm added.
Teneo also reported that Kyle Davies, the other co-founder of 3AC, had received a similar committal order and was also facing a four-month sentence. However, the liquidation firm said that Davies’ whereabouts are still unknown.
3AC was a $10 billion hedge fund that went under after the collapse of the Terra ecosystem in 2022. The hedge fund had excessive leverage on long positions across some cryptocurrencies and borrowed hundreds of millions of dollars from crypto lending protocol.
Despite being quite active on social media, co-founders Zhu and Kyle Davies have been evading liquidators since the company’s demise.
However, now that he will be in prison for four months, the liquidators intend to use this time to engage with him on matters relating to 3AC and discuss the recovery of assets belonging to 3AC.
“The liquidators will pursue all opportunities to ensure Mr Zhu complies in full with the court order made against him for the provision of information and documents relating to 3AC and its former investment manager during the course of his imprisonment and thereafter and may make applications for further court orders as required,” a statement said.
This arrest and imprisonment would mark the first instance where any real legal action against the founders has been taken.
While in hiding, Zhu and Davies launched a new exchange called OPNX meant to make it simpler for investors to trade bankruptcy claims for other crypto firms that year that failed, such as FTX.
Following their involvement with the collapse of 3AC, Zhu and Davies have been barred from managing, leading, or becoming shareholders “of any capital market services firm” for the subsequent nine years, as per a decision made by Singapore’s central bank earlier this month.
Crypto Industry Takes Legal Action
After the cryptocurrency market crashed last year, Zhu is the most recent CEO in the industry to be detained.
Sam Bankman-Fried, the creator of the cryptocurrency exchange FTX, was detained in the Bahamas in December and then charged with planning a significant scam using his business. His criminal trial will start in a Manhattan federal court on Tuesday where he will face 8 charges, among them fraud.
Do Kwon, the founder of the cryptocurrency business Terraform Labs, and a traveling companion were detained in Podgorica, the capital of Montenegro, in March as they attempted to board a private jet to Dubai, United Arab Emirates. He also faces a fraud accusation.