The entire stablecoin market is now worth over $160 billion.
Justin Thales | AFP via Getty Images
Co-Founders of Failed Crypto Hedge Fund Three equity shares He appears to be a fugitive from creditors, according to court documents filed recently in New York.
Lawyers representing the creditors say the actual whereabouts of Zhu Su and Kyle Davies, who founded Three Arrows in 2012, are “currently unknown” ahead of a hearing scheduled for 9 a.m. ET Tuesday to discuss the next steps in the liquidation process. The documents, which were filed Friday evening, claim that the founders have not yet begun to cooperate with the liquidation process “in any meaningful way.” On Monday, lawyers asked the court to keep the identities of the creditors anonymous.
Cho and Davis did not respond to requests for comment.
Three Arrows, also known as 3AC, managed about $10 billion in assets as of March. On July 1, the company filed for Chapter 15 bankruptcy protection from US creditors in the Southern District of New York, after the collapse of cryptocurrencies and the collapse of a stablecoin project terraUSD (UST) wiped out its assets.
Before filing for bankruptcy, a court in the British Virgin Islands ordered the embattled fund to liquidate in order to pay off its debts.
Now, 3AC is in bankruptcy court, facing angry lenders who want their money back. Global consulting firm Teneo has been hired to help manage the liquidation, starting with trying to determine what’s left.
According to a court filing on Friday, Zhu and Davies, both former Credit Suisse dealers, participated in a preliminary hearing. Zoom He called last week to discuss basic steps for preserving their assets. Neither founder played his video, and both remained silent for the duration, with all the dialogue going through the attorney. Their lawyers said at the time that they “intend to cooperate.”
During the meeting, representatives helping to facilitate the liquidation requested immediate access to 3AC offices and information regarding their bank accounts and digital wallets. As of Friday, that access had not been granted, the file says.
When the fund’s liquidator earlier arrived at 3AC’s office in Singapore in late June in an effort to meet the founders, “the offices seemed vacant except for a number of inactive computer screens.”
The recording notes that while the office door was locked, representatives could see unopened mail addressed to Three Arrows, which “appears to have been pushed from under the door or propped against the door.” Neighbors in adjacent offices said they last saw people in 3AC’s office in early June.
In the meantime, creditors are trying to determine the remaining assets.
Teneo’s Russell Crumpler, who has been tasked with helping facilitate the bankruptcy process, said in a statement under oath that there is a “real risk” that 3AC’s assets may disappear, “in the absence of the immediate authority to pursue discovery.”
“This risk increases because a significant portion of the debtor’s assets consist of cash and digital assets, such as cryptocurrencies and non-fungible tokens, that can be easily transferred,” Crumpler said in his statement.
There are reasons for this concern. One of the 3AC’s NFTs transferred to another crypto wallet, According to a well-known collector and investor in NFT.
In a filing Friday, the creditors asked the court to suspend 3AC’s right to transfer or dispose of any assets. The attorneys also ask the court to subpoena the founders or others with information about 3AC’s assets. This can include banks, cryptocurrency exchanges, and counterparties.
3AC’s bankruptcy has already had a huge impact on the broader crypto market, as many institutions have funds wrapped with the company.
Voyager Digital Asset Brokerage Filed for Chapter 11 bankruptcy protection After 3AC was unable to repay nearly $670 million Borrow from the company. Cryptocurrency lenders in the United States Genesis and BlockFiAnd the Crypto Derivatives Platform BitMEX and FTX Cryptocurrency Exchange It also suffers losses.
Watch: Voyager Digital suspends withdrawals as Three Arrows Capital files for bankruptcy
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