Digital asset hedge fund co-founder Su Zhu has been arrested at Changi Airport in Singapore, according to multiple reports. Zhu is a co-founder of Three Arrows Capital (3AC), the fund that played a significant role in the crypto collapse of 2022.
The downfall began when TerraUSD/LUNA, a stablecoin attempting to hold its value to the dollar, experienced a catastrophic failure in 2021. This collapse had a domino effect on the crypto market, with 3AC among the early casualties. The hedge fund reportedly held hundreds of millions of dollars in TerraUSD, along with other digital assets, all of which saw a rapid decline in value.
The collapse of 3AC resulted in insolvency, leaving creditors with approximately $3 billion in losses. Teneo, the bankruptcy manager overseeing the 3AC insolvency, has revealed that Zhu was apprehended, possibly attempting to flee from the authorities. As a result of his lack of cooperation with the investigation into the 3AC debacle, Zhu is expected to serve a four-month prison sentence.
Meanwhile, the other co-founder of 3AC, Kyle Davies, is currently on the run, with his whereabouts unknown. The entity itself is registered in the British Virgin Islands and is currently undergoing liquidation as directed by the local courts. The goal of this process is to maximize the value for the creditors involved.
The arrest of Zhu and the ongoing search for Davies highlight the serious consequences faced by those involved in the crypto collapse of 2022. As authorities continue their investigations and creditors seek to recover their losses, the fallout from this event is likely to have long-lasting implications for the digital asset industry.
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