Three Arrows co-founder sent to prison in Singapore, says liquidator

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Su Zhu, co-founder of collapsed crypto hedge fund Three Arrows Capital, has been imprisoned for four months for failing to co-operate with investigations into its failure, its liquidator said on Friday.

Zhu was arrested in Singapore’s Changi airport earlier in the day while trying to leave the country after Teneo won a court order earlier this week for his committal to prison, the advisory firm said in a statement.

His Three Arrows co-founder, Kyle Davies, has also been committed to four months in prison “but his whereabouts remain unknown at this point in time”, Teneo said.

Zhu’s detention marks a year-long search to find the heads of the crypto fund whose failure last year marked the beginning of a sharp decline in crypto prices and the collapse of many companies.

The Singapore-based hedge fund was a prominent actor in crypto markets, turbocharging its outsized positions with heavy borrowing before its bets soured last June.

Teneo was appointed by a court order in the British Virgin Islands to liquidate its holdings but the liquidators have grown frustrated with Zhu and Davies.

It won a Singapore court order earlier this year compelling Zhu to co-operate in the investigation, arguing that the founders had not made themselves available and had not voluntarily provided important information.

Teneo on Friday said it won the committal order from the Singapore court against Zhu “as a consequence of his deliberate failure” to comply with the liquidators and “account for his activities as one of the founders of 3AC”.

Zhu and Davies told the New York Times in June they had instead spent time travelling including visiting Bali, meditating and surfing.

They also announced plans in January to raise $25mn for a new crypto exchange that traded bankruptcy claims after the failure of FTX. Teneo said Davies’s fundraising efforts were done “shamelessly, while ducking his obligations to his failed company”.

The order sentenced Zhu to four months in prison, which he will now serve. “Liquidators will seek to engage with him on matters relating to 3AC, focusing on the recovery of assets that are either the property of 3AC or that have been acquired using 3AC’s funds,” Teneo said.

The Singapore police has been contacted for comment.

The firm owes more than $3bn to creditors which include collapsed broker Genesis and exchange Blockchain.com.

Earlier this month, the Monetary Authority of Singapore banned the disgraced founders from participating in the financial sector for nine years. Last year, Singapore reprimanded Three Arrows for providing false information and breaching asset management thresholds.

Its failure led to plunging token prices and contagion across the industry, engulfing lenders including Voyager, BlockFi and Genesis, and forcing investors to focus on the risks of highly leveraged bets within the crypto industry.

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