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Singapore Arrests Collapsed Crypto Hedge Fund Cofounder

Authorities in Singapore have apprehended Three Arrows Capital (3AC) cofounder Su Zhu as he attempted to leave Singapore. Teneo, the liquidator in charge of managing 3AC’s bankruptcy proceedings, released an official statement last week detailing the capture of Zhu at Changi Airport as he tried to exit the city-state.

According to Teneo, Su Zhu and Kyle Davies, his cofounder, were given four-month prison terms. Currently, Davies’ whereabouts remain unknown. This was a result of the Singaporean Courts’ ruling against Zhu for his deliberate noncompliance with court orders compelling him to cooperate with Teneo’s investigation into the collapse of the crypto hedge fund and creditor claims.

At its zenith in 2022, 3AC managed a massive $10 billion in assets, solidifying its position as one of the top crypto hedge funds globally. The fund’s demise, however, came in the middle of 2022 as a result of a combination of sharply falling crypto prices and a particularly risky trading strategy that left it unable to pay back its lenders. The aftermath of 3AC’s bankruptcy led to a string of bankruptcies in the crypto industry.

Davies, currently at large, is confronted with a similar court order for committal. Law enforcement agencies have been directed to apprehend him “safely,” ensuring he serves his prison sentence.

Teneo has stated its intentions to work with Su Zhu on 3AC-related issues while he is still in prison, with a primary focus on recovering assets that rightly belong to the fund or were acquired with 3AC’s resources. The liquidator hasn’t ruled out the prospect of requesting additional court orders to further its objectives.

Reports emerged in January that Davies and Zhu were actively looking for investors for their startup, GTX, a distressed debt marketplace designed to take advantage of opportunities brought on by industry bankruptcies. The duo, however, have been given a nine-year ban, effective September 13, from participating in regulated investment operations by Singapore’s Monetary Authority, which is responsible for overseeing these activities.

Su Zhu now joins the growing list of crypto executives who have faced legal action following the crypto market’s turbulent period last year. FTX founder Sam Bankman-Fried was arrested in December in the Bahamas, facing allegations of orchestrating an extensive fraud scheme within his company. He is currently in custody, awaiting his trial. Terraform Labs founder Do Kwon, who is also facing fraud allegations, was arrested in Podgorica in March as he was attempting to board a private flight bound for Dubai.

As the authorities take action against any wrongdoing within the crypto space, legitimate companies such as Bit Mining Ltd. (NYSE: BTCM) will gain more traction as public confidence in these entities grows.

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