Crypto Founders and Executives Face Legal Troubles Amid Sector Collapses

According to Bloomberg, the legal troubles of crypto founders and executives continue to make headlines as the sector experiences collapses. Three Arrows, a company founded by Su Zhu and Kyle Davies, imploded in 2022 due to leveraged bets that contributed to a $2 trillion digital-asset rout. Liquidators are now seeking to recover $1.3 billion from Zhu and Davies, accusing them of failing to cooperate meaningfully with their probe. Zhu has previously stated that their good-faith efforts to cooperate were met with baiting, and their counsel has called the court orders obtained by the liquidators baseless.In another case, Thomas Smith, Kyle Nagy, and Braden Karony, the individuals behind the crypto token SafeMoon, have been accused of diverting and misappropriating millions of dollars' worth of SafeMoon. The token once boasted a 19,000% price gain during the 2021 crypto frenzy. Karony was arrested in Utah, and Smith was arrested in New Hampshire, while Nagy remains at large, according to the office of the US Attorney for the Eastern District of New York. Lawyers for the plaintiffs have not responded to requests for comment.Mark Karpeles, a central figure in the early days of Bitcoin and former CEO of the Mt. Gox exchange, was cleared of embezzlement charges by the Tokyo District Court. The court concluded that Karpeles had acted without ill intent, despite allegations that he mixed his personal finances with those of the exchange and manipulated its accounts to hide losses from hackers.Lastly, Faruk Fatih Ozer, the former operator of the collapsed Turkish crypto exchange Thodex, was sentenced to prison in 2021. Nathaniel Chastain, a former employee at the nonfungible token marketplace OpenSea, was also accused of insider trading.