Three Arrows Founders Su Zhu and Kyle Davies Pull a Do Kwon

In Brief

• 3AC co-founders frustrate liquidation efforts through silence and non-disclosure of whereabouts.
• The co-founders had reportedly disclosed only partial information regarding the defunct hedge fund's assets.
• The non-disclosure of their whereabouts mimics that of Do Kwon, the CEO of Terraform Labs.

Three Arrows drama:The liquidator appointed to wind down the affairs of bankrupt Singaporean hedge fund Three Arrows Capital has asked a judge to allow it to issue subpoenas. These will be sent via Twitter and email to the fund’s founders, who seem to have vanished into thin air.

This request comes as Teneo, the firm tasked with liquidating the company’s assets, struggles to engage co-founders Su Zhu and Kyle Davies using traditional methods.

3AC founders uncooperative
Indeed, both have only engaged the liquidators individually since an initial virtual meeting involving them both. Davies has reportedly failed to disclose access information for a safety deposit box holding crypto credentials.

“The founders, through counsel, have maintained that the limited information provided to us to date, which amounts to an incomplete list of assets and selective disclosures regarding the means to access digital assets electronically, represents all of the documents in their possession relating to Three Arrows,” said one of the liquidators acting on behalf of Teneo.

3AC also faces scrutiny from two federal oversight agencies well-known to the crypto world: the U.S. Commodities and Futures Trading Commission and the U.S. Securities and Exchange Commission. According to Bloomberg, both agencies are looking into whether the hedge fund misled investors by not registering with them and misrepresenting its balance sheet.

Three Arrows Capital lost big time when LUNA suddenly became worthless. They had invested at least $200 million in the coin. LUNA’s collapse was part of a spectacular meltdown of an algorithmic stablecoin ecosystem belonging to Terraform Labs that saw investors lose about $40 billion.

Since then, the Luna Foundation Guard, an entity designed to help Terraform Labs’ stablecoin maintain its peg to the U.S. dollar, has not yet compensated divested parties for the losses incurred.

Three Arrows and links with TFL and Do Kwon
The Three Arrows Capital founders’ lack of cooperation mimics the story of Do Kwon, the CEO of Terraform Labs. Albeit, in this case, the elusive Terraform Labs CEO and co-founder, Do Kwon, has been slightly more vocal on social media.

Kwon has been engaged in a cat-and-mouse game with South Korean authorities since the country’s law enforcement issued a warrant for his arrest on Sep. 17, 2022, after he reportedly fled Singapore. He later went on record as saying that he was not “on the run.”

Not long after, South Korean prosecutors asked Interpol to issue a “Red Notice” against the TFL CEO. It will allow law enforcement to provisionally arrest a person as they await extradition or further legal proceedings.

Following his addition to the Red List, Kwon denied that he was in hiding. He claimed that he was “writing code” in his living room and had not been accosted by any law enforcement, despite going for walks and going to malls.

The most recent action taken by South Korean officials that may force Kwon to reveal his whereabouts is revoking his passport. Officials said they would also deny applications for a new passport.

Astute on-chain analysis later revealed that Kwon was actively moving LUNA 2.0 tokens from the Terra 2.0 blockchain to Binance.

At press time, Kwon had not responded to the revocation but continued tweeting about the progress on the Terra 2.0 blockchain.

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