The co-founder of Three Arrows Capital has been arrested for failing to cooperate with the hedge fund’s bankruptcy proceedings, according to liquidators.

Su Zhu, co-founder of now-bankrupt Three Arrows Capital ( 3AC ) has been arrested in Singapore, according to a tweet posted by online news aggregator db ( @tier10k  on X ), which was later confirmed by Three Arrows liquidator Teneo.

The liquidator said Zhu's arrest and sentencing stemmed from his failure to cooperate in 3AC's bankruptcy proceedings. His partner and 3AC co-founder Kyle Davies is also wanted by Singapore authorities but has not yet been arrested.

Successive closures

The collapse of 3AC was a shocking event in the crypto industry given its prominent position and large investments in projects such as LUNA, Aave, Avalanche, BlockFi, Deribit, and Solana. According to media analysis, the company’s lack of a sound risk management framework, coupled with reckless trading and severe greed, laid the foundation for the company’s collapse.

The chain reaction that led to 3AC's collapse was triggered by the collapse of LUNA, the company's main investment, in May. Despite managing about $18 billion in crypto assets at its peak, 3AC failed to meet margin calls in June, sparking speculation about the company's financial health. Subsequently, it failed to repay a total of $665 million borrowed from cryptocurrency broker Voyager Digital, leading to further instability in the industry.

The Monetary Authority of Singapore (MAS) played a major role in uncovering the company’s shady dealings. In September, MAS issued a nine-year ban on 3AC founders Su Zhu and Kyle Davies. MAS’ investigation revealed that 3AC failed to inform the regulator about the appointment of Cheong Jun Yoong Arthur as its portfolio manager and misrepresented his employment status. These actions were due to Zhu and Davies’ failure to perform their duties, in addition to an inadequate risk management framework.

The collapse of 3AC had far-reaching consequences, affecting not only its stakeholders but other companies in the industry as well. As 3AC was unable to repay its debts, Voyager Digital was forced to file for bankruptcy. The chain of events resulted in losses totaling over $3 billion, affecting a total of 27 companies. #新加坡  #犯罪