Su Zhu, the co-founder of the now-defunct Singapore-based crypto hedge fund Three Arrows Capital, was apprehended in Singapore. Teneo, the liquidator handling the case, reported that Singapore Courts issued a committal order against Zhu on September 25, instructing the police to arrest him immediately. He was taken into custody at Changi Airport while attempting to depart the country.
Zhu sentenced to jail for four months
Three Arrows Capital (3AC) filed for bankruptcy last year in June 2022. The hedge fund, established in 2012 and managed up to $10 billion at one point, faced financial troubles leading up to its failure. Creditors allege that 3AC owes up to $3.5 billion, and liquidators seek to recover approximately $1.3 billion from founders Su Zhu and Kyle Davies, who purportedly incurred the debt when the firm was already insolvent.
Singapore Courts issued committal orders against both Zhu and Davies in response to non-compliance with court orders or judgements. Zhu has been sentenced to four months in jail when liquidators intend to engage with him on matters relating to 3AC. A similar committal order has been granted against Kyle Davies, who remains at large.
Meanwhile, the founders recently launched a new crypto trading platform called OPNX, designed for traders to exchange bankruptcy claims for assets of other distressed crypto companies, including FTX.
While Zhu is incarcerated, Teneo plans to extract further information related to 3AC to assist with asset recovery and ensure compliance with his court order both during and after his imprisonment. It’s worth noting that former FTX CEO Sam Bankman-Fried had volunteered to assist with the bankruptcy process for his fallen exchange. Still, he has since been imprisoned for a separate matter related to witness tampering.
Three Arrows Capital banned in Singapore
The arrest in Singapore follows Singapore’s central bank’s move where it recently imposed nine-year prohibition orders on Kyle Davies and Su Zhu for alleged violations of the country’s securities laws to their co-founded crypto hedge fund, Three Arrows Capital (3AC).
On September 13, the prohibition period began, during which Zhu and Davies were barred from engaging in regulated activities. They are also prohibited from managing, acting as directors, or being substantial shareholders of any capital market services business in Singapore.
MAS’s decision to impose the ban was based on findings of further securities law violations during its extended investigations into the bankrupt 3AC and its co-founders. MAS asserted that Su and Davies failed to inform the central bank that 3AC had employed a new business representative, provided false information to the regulator, and neglected to establish an appropriate risk management framework.
Loo Siew Yee, the Assistant Managing Director of Policy, Payments, and Financial Crime at the Monetary Authority of Singapore (MAS), emphasized that MAS treats Su Zhu and Kyle Davies’ blatant disregard of MAS’ regulatory requirements and their neglect of their directors’ duties with utmost seriousness. She underscored that MAS is committed to taking action against senior managers who engage in such misconduct.
Meanwhile, a similar arrest was made in Hong Kong concerning the JPEX crypto exchange scandal. The police describe these individuals as “relatively close to the core” of the scandal. With these recent detentions, the total number of arrests has reached 18. Authorities are also actively tracking down several other suspects. One apprehended individual was reportedly caught attempting to destroy documents using paper shredders and bleach in an apartment bathtub.
