Three Arrows Capital Founders Served Subpoenas via Twitter in Bankruptcy Process

January 5, 2023 Bitcoin.com

3AC subpoenas issued as dispute grows over claims of Terraform dump

December 7, 2022 Coin Telegraph

3AC

The bankruptcy judge has given approvals to subpoenas aimed at Three Arrows Capital’s leadership, while a new Terra Luna conspiracy has been floated.

A federal judge overseeing Three Arrows Capital’s (3AC’s) bankruptcy proceedings has signed an order approving subpoenas to be delivered to 3AC’s former leadership, including co-founders Su Zhu and Kyle Davies.

The subpoenas require the founders to give up any “recorded information, including books, documents, records, and papers” in their custody that relates to the firm’s property or financial affairs.

The infamous hedge fund, worth $10 billion at its peak, filed for Chapter 15 bankruptcy on Jul. 1 with its troubles tied up in too much leverage and the collapse of Terra Luna (LUNA), known now as Terra Classic (LUNC), and its algorithmic stablecoin formerly known as TerraUSD (UST).

Since then, the liquidators — advisory firm Teneo — have been trying to hunt down the firm’s assets and pin down the 3AC's co-founders.

The latest order allowing for the subpoenas will require recipients to give up any and all account information, seed phrases, and private keys for its digital and fiat assets, details about the securities and unregistered shares, and any accounts held on centralized or decentralized exchanges, along with any other tangible or intangible assets.

The order also labels hedge fund attorney Hannah Terhune, directors Mark Dubois and Cheuk Yao Pau, and Kelly Chen — wife of co-founder Kyle Davies — as “discovery targets”, alongside trading desk company Tai Ping Shan Limited, venture capital firm DeFiance Capital, 3AC-backed NFT fund Starry Night Capital and all of their associates.

Any individuals served with the subpoena are required to comply within 14 days unless otherwise agreed with the parties.

At the time of writing there has been no solid information on the whereabouts of either Zhu or Davies, it’s rumored Zhu is residing in Dubai while Davies is residing on the Indonesian island of Bali. Both have been active on social media commenting on developments relating to the collapse of FTX and Alameda research.

Claim: Terraform dumped $450M UST before crash

Meanwhile, self-proclaimed Terra whistleblower FatMan has made new claims on Twitter that it was the actions of Terraform Labs itself that led to the de-pegging of TerraUSD (UST), now TerraClassicUSD (USTC), in May — as opposed to a concerted attack.

That being said, not everyone is convinced about the theory or that the information is new.

In a Dec. 6 Twitter thread FatMan cited “bombshell data” from anonymous researcher Cycle_22 that purportedly discovered two trading wallets which are verified to be owned by Terraform Labs had “dumped” $450 million worth of UST on the open market in the three weeks leading up to the de-peg, explaining:

“TFL has been perpetrating the narrative that UST was ‘attacked.’ This is a false flag.”

“In reality, TFL themselves weakened the Curve pool by irresponsibly dumping a massive amount of UST in a short timeframe. This reduced liquidity and severely weakened the peg," FatMan said.

December 6, 2022: New on-chain data indicates TFL sold $450m in UST in the weeks leading up to the UST collapse, greatly exacerbating if not directly causing its demise. https://t.co/ijPMo0XqVt
— FatMan (@FatManTerra) December 6, 2022

However, some Twitter users responding to the thread have stated it was “public knowledge” that TFL was withdrawing UST from a Curve liquidity pool (3Pool) in preparation to seed its new stablecoin liquidity pool (4Pool) it was working with Frax Finance at the time.

Others, such as Twitter user RyanLion said it had been “clearly communicated” that the UST swaps into the curve pool were part of moves of swapping UST into other stables to purchase Bitcoin (BTC) for the Luna Foundation Guard reserves.

A June blog from blockchain firm Chainalysis said that while Terraform Labs withdrew millions of UST from 3Pool at the time (approximately 150 million), it was the actions of two traders in the hour following — swapping a total of 185 million UST for USDC and TFL’s response to that, which led to the depeg and resulting panic sell-off.

Three Arrow’s Su Zhu reveals latest attempts at a comeback post-FTX

November 28, 2022 Coin Telegraph

3AC

The fall of FTX appears to have brought back certain crypto "villains” out from hiding, one even wants to start a new podcast series.

Three Arrows Capital co-founder Su Zhu looks like he may be attempting a comeback amid the fallout over FTX and Sam Bankman-Fried — seen by some as the crypto industry’s newest supervillain.

After months of radio silence, Su Zhu remerged on Twitter on Nov. 9, the day after FTX revealed it was suffering from a “liquidity crunch.”

As the FTX saga has unfolded, Zhu has continued to post on Twitter, offering sage advice through poetic metaphors, while tweeting veiled criticism of Sam Bankman-Fried and his handling of FTX.

That being a better swimmer led to her death felt bizarre yet obvious

The better she could swim the more she underestimated nature, how the difference between people is like the difference between grains of sand, just as theres no mighty grain there is also no mighty person
— Zhu Su (@zhusu) November 10, 2022

In his latest Nov. 27 Twitter thread Zhu revealed his next steps — the launch of a “long-form video podcast series” that discusses “life, belief systems, and mental health” which will be launched with a collaborator and friend named “Cliff.”

In the tweet, Zhu also makes reference to Allah, a sign some believe means he had converted to Islam.

Cliff and I will launch a longform video podcast series soon discussing life, belief systems, and mental health.

Allah does not charge a soul except that which is within its capacity.
— Zhu Su (@zhusu) November 27, 2022

Recently, Zhu also hinted at creating a new trading firm in a Nov. 22 interview with Bloomberg saying it could be an “all-weather fund” — made to perform reasonably through all market conditions — that invests in traditional financial assets and crypto.

Zhu’s latest quasi-announcement has attracted more criticism than support, however, with many drawing a contrast between his actions at 3AC with the ideologies presented in Islam.

Blogger and nonfungible token (NFT) project founder Foobar asked “what does Allah say about interest-bearing loans?”

Another user pointed out that interest is “haram”, or forbidden under Islamic law.

Su: "sorry brah can't pay back the loan its not Sharia-compliant" pic.twitter.com/QsfJq7aDUL
— vechudnov (@chudnovglavniy) November 27, 2022

Over the last few weeks, the community has noticed a return of so-called “crypto villains” to Twitter following the collapse of FTX.

Another Three Arrows Capital co-founder, Kyle Davies recently reappeared on Twitter after months of radio silence, posting on Nov. 13 on Twitter that he’d spent the last few months seemingly looking at grass and painting.

He even appeared on CNBC’s Squawk Box program on Nov. 16 to allege Alameda “hunted” 3AC’s positions.

My initial process was to spend my time searching and understanding. Less markets and screens, more grass and painting.

I will look to share my understanding to the extent it contributes to good and to light.

Yours Truly, Humbled and Gracious pic.twitter.com/z7YFvQwiRd
— Kyle Davies (@KyleLDavies) November 13, 2022

Alex Mashinsky, the founder of the bankrupt lending platform Celsius Network has also made a reappearance after FTX’s downfall, appearing in a series of Twitter Spaces over the last few weeks.

In a Twitter Space on Nov. 27 Mashinsky said he “loves the idea” of getting FTX to “pay for the hole” and asked listeners to “make a lot of noise” and convince bankruptcy lawyers for Celsius and its Committee of Unsecured Creditors to sue FTX to pay for Celsius’ cash deficit.

One of the more frustrating parts of the FTX collapse is that all of the previous villains are coming out of woodwork pretending like they are victims.

Reminder: we are in this mess because of @KyleLDavies, @zhusu, @stablekwon, @SBF_FTX (others too but remember these 4). https://t.co/ltAd3SeA4H
— Haym (@SalomonCrypto) November 24, 2022

It’s estimated that Mashinsky, Zhu, and Davies owe creditors around $6.3 billion.

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October 18, 2022 Bitcoin.com

3AC liquidators seek ‘alternative means’ to subpoena missing founders

October 18, 2022 Coin Telegraph

Bankruptcy

Advisory firm Teneo argued that standard methods to contact the Three Arrows Capital founders have failed, and is now looking for other ways to subpoena them.

Liquidators for Three Arrows capital (3AC) have asked a U.S. court to grant them permission to subpoena the embattled crypto hedge fund 's founders through “alternative means.”

To this date, the whereabouts of Three Arrow Capital founders Su Zhu and Kyle Davies remains unknown, with some accusing the duo of being on the run.

In a court motion filed to the United States Bankruptcy Court Southern District of New York on Oct. 14, advisory firm Teneo claimed that standard methods to contact the duo have failed as the “Founders’ whereabouts remain unknown.”

It also said that the request for Advocatus Law LLP, the “Singapore counsel purporting to represent the Founders” has declined to accept the subpoenas on behalf of the pair, adding that the founders have also “yet to offer any forthright cooperation” having “only made themselves directly available for two brief discussions” since proceedings began.

As a result, the liquidators had asked the court to use “alternative means” to serve subpoenas, which is understood to include reaching out to the duo on their Twitter accounts and email addresses.

With the filing of this new motion, liquidators say they seek the “authority to serve subpoenas for the production of documents and testimony on the Founders, the Investment Managers, and third parties.”

Meanwhile, an Oct.18 report from Bloomberg claims U.S. regulators are launching a probe into possible legal violations by the Singapore-based hedge fund.

Bloomberg alleges the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) are now investigating whether 3AC misled investors and failed to register with the appropriate agencies.

Both Zhu and Davies have been keeping a low profile in the wake of 3AC’s insolvency since June.

3AC filed for a Chapter 15 bankruptcy on Jul. 1 in a New York court; however, Zhu and Davies’ current location has never been disclosed.

Zhu resurfaced briefly on Twitter in July when he accused liquidators of ‘baiting’ them for information to use in court, with Davies retweeting the post, but the duo has gone radio silent again since then.

3AC managed billions in assets at one point but became another crypto firm to go bankrupt in the bear market after the broad sell-off in digital assets spurred in part by the collapse of the Terra blockchain and alleged poor management decisions on their part.

Three Arrows Capital fund moves over 300 NFTs to a new address

October 5, 2022 Coin Telegraph

3AC

According to blockchain provider Nansen, hundreds of NFTs have been moved from the 3AC-linked fund to a Gnosis Safe address.

Starry Night Capital, a nonfungible-token (NFT)-focused fund launched by the co-founders of the now-bankrupt hedge fund Three Arrows Capital (3AC), has moved over 300 NFTs out of its address, according to reports.

The Starry Night Capital was founded last year by Su Zhu and Kyle Davies, and pseudonymous NFT collector Vincent Van Dough. At the time, the fund planned to exclusively invest in "the most desired" NFTs on the market.

Blockchain data provider Nansen on Oct. 4 on Twitter noted that the NFTs were reportedly shifted from a wallet associated with the fund, including "Pepe the Frog NFT Genesis," which sold for 1,000 Ether (E TH) in October last year, worth $3.5 million at the time.

Nansen said the NFTs previously collected by Starry Night Capital are moving to a Gnosis Safe address.

Gnosis Safe is a platform used to manage digital assets on Ethereum, giving users complete self-custody over funds and digital assets.

A report from Bloomberg estimates the Starry Night Capital collection's total value sits at around $35 million.

NFTs previously collected by Starry Night Capital are moving to a Gnosis Safe address.

These NFTs include:
- Pepe the Frog NFT Genesis, sold for 1,000 ETH (~$3.5M) on Oct 5, 2021
- Fidenza #718, sold for 240 ETH (~$1.1M) on Nov 13, 2021

Some other notable NFTs below pic.twitter.com/8PU13CqMnn
— Nansen (@nansen_ai) October 4, 2022

It comes months after the Singapore-based crypto hedge fund, 3AC was ordered into liquidation by a court in the British Virgin Islands, leading to the appointment of liquidation firm Teneo, which has gained control of at least $40 million of 3AC assets so far as of an August report from Cointelegraph.

That sum however accounts for only a tiny fraction of the 3AC’s debt to its creditors, which amounts to at least $2.8 billion.

The NFT's transfers came almost four months after Starry Night Capital's main crypto wallet moved almost all of its digital tokens to a new address.

The Singapore-based crypto hedge fund, 3AC, became one of the many crypto firms that went bankrupt following the collapse of the Terra ecosystem earlier this year. The company, which once had over $10 billion in assets under management, eventually filed for a Chapter 15 bankruptcy on Jul. 1 in a New York court.

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su zhu