What Happened?!
Yesterday I began to see the stories that the founders of Three Arrows Capitol or 3AC were nowhere to be found. At first, I thought however that this was clickbait or something that could be easily explained since where would you run to with crypto being global now?! It turns out though that the initial headlines were right and currently we have no idea where the founders of the former world's largest crypto hedge fund are!
How Could This Happen?!
As more and more people have found out and understood that this is a real thing and that the two founders are nowhere to be found people have begun asking how could this be allowed to happen. The answer for that is actually pretty easy... When your company goes bankrupt and declares/is forced into liquidation authorities do not arrest you or even put you under surveillance and you are allowed to continue to do the things you wish to as a free person.
Another reason or layer to this also happens to be that these two individuals lived in Singapore with their fund being "located" in the British Virgin Islands and the bankruptcy occurred in a New York court. Due to all of the locations and jurisdictions involved even if the U.S. courts wanted them surveilled it would not have been the easiest task as they try to get everything done that they need to for the courts in Singapore. While TV might make it look like the police can do things as quickly as flipping a light switch that could not be further from the truth especially when the firm is located on the other side of the world.
While recently one of the founders Su Zhu popped back up on Twitter it was not so much of a return as it was a tweet with mail from legal counsel that blamed the liquidators for what was happening. He claims that since the liquidator did not exercise a warrant that 3AC had for StarkWare tokens the loss of those is not his or 3AC's fault. Nowhere was it addressed either what was happening or where he was. Instead, it was just more or less a legal message that adds a new wrinkle to the 3AC saga with the StarkWare tokens.
What is Next for the 3AC Liquidators?!
As for what is next for 3AC and the process that is going to be undertaken a lot has been announced in that aspect. In late June a British Virgin Island court ordered the liquidation of 3AC funds to which 3AC responded by filing for Chapter 15 bankruptcy on July 1st. This is not something that is out of the norm since 3AC by being liquidated is well bankrupt.
However, things did take a significant change in direction when an emergency motion was filed in the same New York court by creditors. This motion was huge because it froze any and all remaining assets that 3AC had. This was done to make sure that the founders and the 3AC team were not able to siphon off any funds ahead of the formal liquidation process. Previous reports have stated that Su Zhu is trying to sell his $35 million Singapore property and that there are NFTs held by the fund. By locking down any and all assets located within the US territory siphoning off money will become much harder to accomplish.
This move also did several other important procedural steps like designating the assigned bankruptcy liquidators (Teneo) as the only ones to have the authority to move around any assets 3AC had in the U.S. It also granted permission to Teneo to subpoena 3AC co-founders Zhu Su and Kyle Davies as well as banks, crypto exchanges and other institutions/firms that had done business with 3AC. This will let Teneo follow the money/token trail to be able to recoup as much as possible. Liquidators are currently gathering account statements and digital wallet information to do just this.
The reasoning for this aggressive move is obvious as no one knows where 3AC's founders or leadership team are and when the physical location they were supposed to be located was entered the place was empty. According to his tweet, Zhu claims that they are in hiding due to threats however this is not verified and they did not answer nor address the court.
This is the next step in a process that some belief could end up taking years to fully unwind. The closest I could think of was the Mt. Gox hack and collapse which is still being hashed out as it is now years later. With several countries involved in various capacities, it is going to require an unprecedented level of cooperation across the globe. Since there are legally registered entities from the UAE to the US, the UK, and Singapore.
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