Liquidators of Three Arrows Capital have successfully petitioned a federal bankruptcy judge to subpoena the hedge fund founders.
The motion was granted in a hearing on July 12 as liquidators Teneo also sought to contact asset exchanges with connections to 3AC. The liquidators want to preserve the hedge fund’s assets. They have not received good cooperation from Kyle Davies and Su Zhu, barring some information about the hedge fund’s assets on a spreadsheet.
Su and Davies’ whereabouts were unknown as of July 9, 2022, and trips by liquidators to the hedge fund’s offices in late June proved fruitless. Employees of companies in surrounding offices said they hadn’t seen anyone enter or exit 3AC’s business premises recently.
Unopened mail was pushed underneath the locked office door. Lawyers representing Zhu and Davies appeared on a Zoom call with Teneo last week and were largely unresponsive to direct questions.
The idea behind the motion to subpoena the founders is to make known the 3AC’s assets are now under the management of the liquidators, Adam Goldberg, a Teneo lawyer, said. The liquidators are looking for repositories of funds belonging to the hedge fund, including digital wallets and bank accounts, to check if there has been any movement of funds. Some third-party institutions required the subpoenas to be served in compliance with company rules.
Peckshield, a blockchain security company, revealed that 3AC had moved a significant portion of its crypto to KuCoin Exchange, including $20 million USDC and $10 million Tether, a claim KuCoin denied.
Last week liquidators created a website for creditors to claim against 3AC and find out more about the liquidation ordered by a British Virgin Islands Court. Deribit and Blockchain.com are among the early creditors that pushed for 3AC’s liquidation. 3AC borrowed 1,300 bitcoins and 15,000 ether in March 2020 from Deribit.
Teneo’s lawyers said they still have no idea where the founders are. Both have received violent threats and are under scrutiny from the Monetary Authority of Singapore for providing misleading information and exceeding the value of assets under its management for two periods in 2020 and 2021.
The beleaguered crypto fund infected at least one other company in the crypto ecosystem as credit contagion spread after the collapse of the TerraUSD stablecoin lost 3AC $200 million. Voyager Digital, which loaned the company in the region of $600 million, filed for Chapter 11 bankruptcy about a week ago after suspending trading and withdrawals.