A bankruptcy court in New York has frozen the remaining assets of failed crypto hedge fund Three Arrows Capital as its founders still seem to be missing.
Federal judge Martin Glenn granted the emergency motion on Tuesday, which comes as the founders of the fund, Zhu Su and Kyle Davies, appear to be evading creditors, CNBC reported.
The hedge fund, also called 3AC, managed $10bn (£8.4bn) in assets just months ago but collapsed as the sharp crash in the crypto market sent cryptocurrencies prices plunging and firms struggling to survive.
Global advisory firm Teneo was tasked with managing the liquidation and was given permission by the judge to subpoena the fund’s founders and banks, crypto exchanges and firms that have done business with 3AC.
The main concern is that the fund and its leadership team may siphon funds prior to the formal liquidation, with the physical whereabouts of Zhu and Davies “currently unknown,” according to the creditors’ lawyers, CNBC said. The fund’s offices in Singapore were also reportedly found to be empty.
Law firm Latham & Watkins, who is representing Teneo, said liquidators are seeking documents such as account statements and digital wallet information.
“A key part of this motion is to put the world on notice that it is the liquidators that are controlling the debtor’s assets at this stage,” Adam Goldberg, a lawyer from the firm said.
He said the information provided is “by no means a sufficient form of cooperation.”
Zhu posted on his Twitter on Tuesday saying, “Our good faith to cooperate with the Liquidators was met with baiting.”
Speaking about the situation surrounding the fund’s collapse and the proceedings, James Kaufmann, partner at law firm Howard Kennedy, said to City AM that it was “not really a huge surprise.”
“I always tell my clients, if you don’t understand it, then it’s pure risk for you to make the investment decision.”
3AC and Goldberg did not respond to City A.M.’s request for comment.