In recent news from East Asia, Su Zhu, co-founder of the now-defunct hedge fund Three Arrows Capital (3AC), was apprehended at Singapore’s Changi International Airport while trying to flee the country. Prior to its collapse in June last year, 3AC managed more than $10 billion in digital assets. Zhu was arrested after Singaporean courts issued an arrest warrant due to his failure to comply with a court order to cooperate with the liquidator’s investigations. He was sentenced to four months in prison for the breach.
The liquidator for 3AC, Teneo, stated that creditors would seek to engage with Zhu during his imprisonment to recover assets that belong to 3AC or were acquired using the fund’s funds. They will also ensure that Zhu complies with the court order for the provision of information and documents relating to 3AC and its former investment manager. Meanwhile, the co-founder of 3AC, Kyle Livingston Davies, was also sentenced to four months in prison for contempt of court, but his current whereabouts remain unknown.
Both Zhu and Davies were barred from conducting enterprise investment activity in Singapore for nine years by the Monetary Authority of Singapore due to regulatory violations. These violations included exceeding 3AC’s statutory assets under management limit.
Last year, 3AC filed for bankruptcy after failed leveraged trades on the Terra ecosystem resulted in the loss of all the hedge fund’s assets and left creditors with claims totaling over $3.5 billion. This bankruptcy also led to the bankruptcy of 3AC’s counterparties such as Celsius, Voyager, and FTX. However, the bankruptcy proceedings faced a setback when a U.S. judge halted them due to a clerical error.
After the collapse of 3AC, Zhu and Davies pursued new ventures. Davies opened a restaurant in Dubai, while Zhu’s luxury property in Singapore was converted into an eco-farm. The farm, owned by Zhu’s wife through her company Abundant Cities, produces local vegetables, herbs, fruits, fish, chickens, and ducks. It also serves as a site for testing recipes for native edibles.
In January, Zhu and Davies launched a novel exchange called OPNX, which allowed trading of bankruptcy claims on fallen crypto companies like 3AC and FTX. The platform initially raised $25 million from investors and claimed nearly $50 million in daily trading volume by June. However, following the news of Zhu’s arrest and Davies’ indictment, the Open Exchange Token’s value plummeted, losing 79% in the past month.
OPNX had onboarded tokenized claims of FTX and Celsius, converting them into collateral in the form of its native reborn OX (reOX) tokens or oUSD, its credit currency. However, the claims dashboard of OPNX remains dysfunctional. The executives of OPNX, including Zhu and Davies, were fined $2.7 million by Dubai’s Virtual Asset Regulatory Authority for running the exchange without a license.
Despite their other ventures, creditors of 3AC are focused on recovering the fund’s assets and maximizing returns for themselves. Teneo has successfully recovered several nonfungible tokens owned by 3AC and auctioned them, generating $13.4 million. The proceedings are still ongoing as creditors continue their efforts to recoup their losses.
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