Three Arrows Capital (3AC) Founders Accused Of Being On The Run; Su Zhu Responds

Are the Three Arrows Capital (3AC) founders on the run or are they just avoiding self-incrimination in the eyes of the law? 


  • Three Arrows Capital Bankruptcy Proceedings
  • 3AC: Are The Founders Actually On The Run?
  • Legal Jousting v. Price Action

Three Arrows Capital Bankruptcy Proceedings

The Three Arrows Capital (3AC) bankruptcy proceedings are getting ugly. Like, accusing founders of being on the lam ugly. But we before getting into the most recent legal drama, here’s a quick refresher.

Might be hard to square now, but 3AC was very much a reputable brand in this sphere. So much so their massive investment into the Terra Luna ecosystem gave that house of cards a stamp of approval. Fittingly, the Terra Luna collapse proved that reputation was not well-earned.

Fast forward to now, and the crypto hedge fund has completely imploded to the point that it’s embroiled in bankruptcy proceedings. And, they are getting a little weird.

The proceedings are complicated because of the international nature of the fund: the founders are based out of Singapore, the fund is officially based out of the British Virgin Islands — but thanks to a Chapter 15 filing — the bankruptcy is taking place in New York.

This is thanks to the Chapter 15 filing which grants creditors to make bankruptcy trials with US interests to take place on US soil. It’s not unreasonable, in this case, for Three Arrows Capital to be wedded to the country they do the majority of their business in. However, it comes with complications.

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3AC: Are The Founders Actually On The Run? 

Seeing as the 3AC founders are in Singapore, jurisdictionally it complicates things re: forcing cooperation. According to a filing, on Friday, the founders Su Zhu and Kyle Davies are not cooperating. Even more chillingly, their whereabouts are unknown apparently. Despite these being claims made within a filing, they appear to have as much validity as recently made claims against Alex Mashinsky. 

For one, the 3AC founders were present in a recent Zoom call with the Singapore solicitors that are cooperating with the US — though their legal team spoke for them. Also, Zhu apparently is still tweeting. So, it couldn’t be that hard to find him if you tried.

In the tweets, Su outlines his belief that they were being “baited.” In other words, baited into self-incrimination. Su notes that the Singapore solicitors were keen to ask if the discussions were on a “without prejudice” basis — meaning, their correspondences couldn’t be used in court. The 3AC founder believes the discussions were based around using what they said against them.

3AC: Legal Jousting v. Price Action

It’s unclear if that’s actually the case. Though, today, after the motion filed last Friday, a judge approved the creditors’ side request. They can now subpoena the founders and force them to testify rather than just “cooperate.”

Did posturing like “the Founders have not yet begun to cooperate with the Foreign Representatives in any meaningful manner” work? Probably not. This is being presided over by a judge, not a jury. You could argue that in jury cases like Depp v. Heard having an unsequestered jury helps sway a verdict, even though it shouldn’t by the letter of the law.

In this case, it’s really unlikely that a judge would do anything but roll his eyes at either party trying to make a claim like that, and instead consider the facts as they are laid out, which more than justify a subpoena.

To put it less crudely, it appears, then, this is just garden variety legal jousting. Though, conveniently, this legal “measuring” contest sure does a number on investor confidence — more than anything else. Not to mention, these types of nasty revelations tend to come out more often than not on Fridays. Just in time for weekend volatility.

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