10-10-2023 (SINGAPORE) Zhu Su, the co-founder of Three Arrows Capital, has been imprisoned in Singapore after a prolonged battle with liquidators over the location of the failed crypto hedge fund’s assets. Liquidators, who had obtained a Singapore court order sentencing Zhu to four months in prison for failing to cooperate with the fund’s winding-up process, alerted the police on September 29th when they discovered that Zhu was heading to Changi Airport, according to sources familiar with the matter.
The liquidators had been closely monitoring Zhu’s activities in Singapore, where he was known to host gatherings for crypto executives at his residence in Yarwood Avenue, Bukit Timah. They tracked a car from his mansion to the airport, and the police were informed of Zhu’s potential presence in the vehicle. Zhu was subsequently detained upon his arrival at the terminal on October 5th. The Singapore authorities confirmed the arrest of an unnamed 36-year-old man at 2:50 PM on September 29th when asked about Zhu’s detention.
Zhu’s imprisonment is the result of a committal order, a civil matter issued by Teneo, the joint liquidators of Three Arrows. On September 29th, Teneo announced that it had obtained committal orders for Zhu and the fund’s other founder, Kyle Davies. Although neither individual has faced criminal charges in Singapore, liquidators have accused them of failing to cooperate meaningfully with the investigation and are seeking to recover $1.3 billion from both co-founders. The police only acted upon receiving a tip-off from the liquidators since they were not actively pursuing Zhu.
The collapse of Three Arrows in 2022 due to leveraged bets triggered a digital asset rout worth $2 trillion, leading to several other collapses in the sector. Zhu and Davies, once considered crypto darlings during the pandemic-era bull run, saw their reputations tarnished as the boom turned to bust, exposing risky practices. One prominent figure in the crypto industry, Sam Bankman-Fried, is currently on trial in the United States for allegedly overseeing a multibillion-dollar fraud at the now-defunct FTX exchange. Bankman-Fried has denied the charges against him.
Zhu and his legal representative have not responded to requests for comment, and Teneo declined to provide a statement. Singapore’s police force stated that it had no further information beyond its October 5th statement.
As for Davies, liquidators are collaborating with authorities worldwide to locate him and have informed the crypto community about their determination to find him. However, Davies has not responded to requests for comment.
Liquidators are expected to request permission from the authorities to visit Zhu in Changi Prison to gather information about Three Arrows’ assets. If Zhu refuses to cooperate, further measures may be taken to ensure compliance, according to the sources.
Typical conditions at Changi Prison include four inmates sharing a cell, sleeping on straw mats on the floor rather than beds. In contrast, Zhu’s Yarwood Avenue residence is a two-story, six-bedroom home that he and his wife purchased in 2021 for $48.8 million under a trust, as indicated by public records.
Zhu has previously claimed that his and Davies’ sincere attempts to cooperate with the liquidators were met with hostility. Lawyers representing Davies and Zhu have argued that the court orders obtained by the liquidators are baseless, as revealed in email correspondences submitted to a New York bankruptcy court.
In mid-September, Singapore’s central bank imposed a nine-year prohibition order on both Zhu and Davies for their transgressions at Three Arrows, citing risk management failures and the provision of false information.
In April, the Dubai authorities reprimanded Zhu, Davies, and others for operating and promoting the OPNX crypto exchange without the necessary local license. Zhu has stated that he and Davies contributed initial ideas for OPNX but were not involved in its daily management.
Before its collapse, Three Arrows was considered one of the largest and most successful crypto hedge funds. After operating out of Singapore, the fund shifted its registration to the British Virgin Islands. In June 2022, a British Virgin Islands court appointed Teneo as the liquidator for Three Arrows’ assets.
