Su Zhu, co-founder of collapsed crypto hedge fund Three Arrows Capital, was arrested at Singapore’s Changi Airport Friday and will serve time in prison, several outlets have reported.
Zhu failed to comply with a Singapore court order requiring that he cooperate with 3AC’s liquidation investigation, according to Teneo, the firm in charge of winding down the hedge fund. Because of this failure, the court issued a separate order on Sept. 25 sentencing him to four months in prison, and he was apprehended while attempting to leave the country, Bloomberg reported.
3AC co-founder Kyle Davies, who remains at large, received the same sentence.
Prior to the collapse of the Terra ecosystem in May 2022, 3AC was one of the world’s largest crypto hedge funds. Terra’s collapse left 3AC with significant losses, and the hedge fund’s losses turned into losses elsewhere: Voyager Digital attributed its bankruptcy to its exposure to 3AC, which defaulted on a loan worth more than $650 million, and crypto trading firm Genesis and lender BlockFi also faced losses due to exposure to 3AC.
Terra founder Do Kwon was arrested in March in Montenegro after 10 months on the lam. A number of former captains of the crypto industry have been arrested in the last year, including Celsius founder and former CEO Alex Mashinsky, and FTX founder and former CEO Sam Bankman-Fried. The criminal trial against Bankman-Fried starts Tuesday.
Meanwhile, 3AC owes its creditors approximately $3.5 billion, and $2 billion is owed solely to Genesis, Decrypt reported in July. Liquidators want to squeeze at least $1 billion of that directly from Zhu and Davies, according to Bloomberg.
This spring, Zhu and Davies launched OPNX, an exchange where users can trade claims of bankrupt crypto firms. They raised eyebrows in January when it was revealed by The Block that a group, including the 3AC duo, was trying to raise $25 million to launch the claims trading platform. OPNX’s native token, OX, plummeted in value after Zhu’s arrest, according to BeInCrypto.
The value nosedive was a result of a sell-off of $1 million worth of OX tokens, BeInCrypto reported.
