Three Arrows founders' whereabouts unknown amid liquidation process

NEW YORK • The founders of bankrupt crypto hedge fund Three Arrows Capital have not been cooperating in the firm's liquidation process and their whereabouts were unknown as at last Friday, according to court papers.

Representatives tapped to liquidate Three Arrows by a British Virgin Islands judge had "not yet received any meaningful cooperation" from Mr Kyle Davies and Mr Zhu Su, lawyers said in US bankruptcy court filings.

Advisory firm Teneo is attempting to round up and preserve the assets of the hedge fund.

The liquidators are seeking a US judge's permission to subpoena Mr Davies, Mr Zhu and banks or crypto exchanges affiliated with Three Arrows to prevent the potential "dissipation" of the fund's assets, Mr Russell Crumpler of Teneo said in a sworn declaration. A video hearing was set for yesterday.

"Here, that risk is heightened because a substantial portion of the debtor's assets are comprised of cash and digital assets, such as cryptocurrencies and non-fungible tokens, that are readily transferable," lawyers for the liquidators said in court papers.

Three Arrows, which Mr Zhu and Mr Davies founded after trading at Credit Suisse Group, succumbed to the widespread crypto sell-off last month.

Insolvency proceedings kicked off in the British Virgin Islands and were followed by a so-called Chapter 15 bankruptcy filing in the United States.

The fund's downfall has rippled through the digital asset industry, helping to drive at least one crypto platform that counted Three Arrows as a counterparty into bankruptcy already.

The hedge fund's liquidators travelled to Three Arrows' office address in Singapore late last month in an attempt to track down the founders, court papers show.

It appeared dormant: The door was locked, computers were inactive and mail was stuffed under the door. People working in the surrounding offices said they had not seen anyone enter or exit the office recently.

The liquidators spoke to lawyers for Mr Davies and Mr Zhu via videoconference last week, according to court papers, but did not speak to the founders directly.

"While persons identifying themselves as 'Su Zhu' and 'Kyle' were present on the Zoom call, their video was turned off and they were on mute at all times with neither of them speaking despite questions being posed to them directly," Teneo's Mr Crumpler said in his court declaration.

The lawyers told the liquidators that Mr Zhu and Mr Davies intend to cooperate. A subsequent meeting had been scheduled for Monday, according to court papers.

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