Arrest of Three Arrows Founder Signals End of Crypto Highflier’s Reign


On Friday, Three Arrows Capital co-founder Su Zhu was arrested in Singapore, demonstrating the deteriorating circumstances of once successful crypto founders around the world.

Three Arrows was among the most renowned crypto-native hedge funds, with its co-founders, Zhu and Kyle Davies, being particularly prominent and often deliberately provocative. Their fortune drastically shifted in 2022, when the fund incurred huge losses due to investments in Luna tokens and other assets, leaving creditors with a debt of approximately $3 billion.

Zhu and Davies then went missing, until they reappeared in Dubai to launch OPNX, a platform for tokenized versions of bankruptcy claims, such as those of the FTX exchange. They also posted pictures and conducted interviews from Thailand, Bali, Spain, and Malaysia on X, formerly known as Twitter.

At the same time, the pair was in disagreement with Teneo, the firm appointed to dissolve Three Arrows. Teneo stated in a February filing that Zhu and Davies had not been cooperative, and that Davies continually posted on his Twitter account, disregarding court directives and enjoying media attention, while obstructing Teneo’s attempts to obtain documents and information. The duo, however, accused Teneo of not being proactive in returning funds to creditors.

Zhu’s arrest marked the culmination of the conflict. He had previously told Bloomberg he was concerned about going to jail. The committal order jailed each of them for four months, and Teneo is seeking to recover over $1 billion from them.

The Singaporean financial regulator had already barred them from operating in the city-state for nine years. Davies’ whereabouts are still unknown.

The pattern of legal interventions against alleged crypto wrongdoings continues, with the arrest of FTX co-founder Sam Bankman-Fried in the Bahamas in December, and the detainment of former Celsius CEO Alex Mashinsky in July. Do Kwon, the creator of the now-defunct Terra stablecoin and Luna token, is in custody in Montenegro, accused of falsifying identity documents. All three have denied the accusations.

In the US, both federal and state authorities are investigating whether Three Arrows misled investors and neglected to register with local agencies. At the same time, Teneo will engage with Zhu while he is in prison regarding matters concerning Three Arrows and recovering lost funds. The estate has been attempting to raise money for creditors by auctioning and selling Three Arrows assets, including the co-founders’ super-yacht, “Much Wow.”

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