3AC’s Su Zhu jailed for four months after trying to flee Singapore

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Su Zhu, disgraced co-founder of the defunct Three Arrows Capital (3AC) ‘crypto’ hedge fund, has been jailed for four months after being nabbed by Singapore authorities at the local airport.

On September 29, Teneo—the court-appointed liquidator handling 3AC’s messy autopsy—announced that Su Zhu had been “apprehended at Changi Airport whilst attempting to travel out of Singapore following a committal order granted by the Singapore Courts against him.”

This committal order was obtained by Teneo on September 25 “as a consequence of [Zhu’s] deliberate failure to comply” with a separate court order. That order compelled Zhu to “cooperate with the liquidators’ investigations and account for his activities” as one of the architects of 3AC’s demise.

The committal order, which applied to both Zhu and 3AC’s other co-founder Kyle Davies, authorized any law enforcement official to arrest them on sight and “bring them safely to be imprisoned for 4 months.” Davies’ whereabouts are currently unknown, although he still surfaces on social media.

While Zhu’s enjoying Singaporean prison food—and hopefully some one-sided conversations with an amorous cellmate—Teneo will continue to press him as to where he and Davies might have squirrelled away some of the assets they ‘earned’ from their fraudulent activities. Teneo warned that it would “make applications for further court orders as required.”

3AC, which at its peak had over $10 billion in assets under management, collapsed in May 2022 after the house of crypto cards on which it was constructed started to wobble. 3AC had around $600 million invested in UST, the algorithmic stablecoin/hand-wavey-bullshit token issued by Terraform Labs. When UST lost its peg to the U.S. dollar, it kicked off a cascade of insolvencies that continues to plague the digital asset sector to this day.

Among 3AC’s most prominent casualties was Genesis Global Capital, which even after liquidating the collateral 3AC had provided was still left with a $1.2 billion hole. Barry Silbert’s Digital Currency Group (Genesis’s parent company) attempted to paper over this deficit with a $1.2 billion ‘promissory note’ that matured in 2032, a ploy that outside observers dubbed a worthless IOU.

Voyager Digital was owed less ($685 million) but beat Genesis to bankruptcy court by six months. Blockchain.com ranked third with a $300 million wound while countless other companies suffered ‘mere’ eight-figure losses.

Despite the masses of retail ‘investors’ who lost significant sums as the result of 3AC’s collapse and the resulting contagion, neither Zhu nor Davies has to date shown anything remotely resembling contrition regarding their actions. Indeed, Zhu’s refusal to cooperate with 3AC’s liquidators and this latest attempt to go on the lam only underscore his unwillingness to accept responsibility for his crimes.

The actions of 3AC insiders prior to its demise vividly illustrate this malignantly narcissistic narrative. There were tens of millions of dollars’ worth of various tokens transferred to friends and family in 3AC’s dying days, even as 3AC took on even more debt that its founders understood it could never repay. Before that there were shopping sprees for luxury goods, including a $50 million yacht and two Singapore mansions worth a combined $54 million.

In February, even as defrauded customers were baying for Zhu and Davies’ blood, the pair announced a new Dubai-based crypto project called Open Exchange (OPNX) that quickly raised $25 million and launched in April. However, having failed to obtain a local license, Dubai regulators quickly slapped OPNX with a $2.7 million fine, a shot across the bow that Zhu and Davies (surprise!) proceeded to ignore.

The Monetary Authority of Singapore recently took the long-overdue step of slapping both Zhu and Davies with a nine-year ban on acting in any capacity in any areas governed by the city-state’s Securities and Futures Act. With respect, this was much too little, far too late. Jailing Zhu is a good start, but if he still refuses to cooperate, throw away the f**king key.

Zhu and Davies appear to share the same devil-may-care attitude as Sam Bankman-Fried (SBF), the equally disgraced founder of the bankrupt FTX exchange. SBF’s criminal trial for fraud and money laundering gets underway on October 3, but his actions and statements to date show zero sign that he comprehends how severely his duplicity hurt FTX’s rank-and-file customers.

SBF appears to believe that the rules do not apply to him, that he’s above the law, that he never meant to hurt anyone but if he did he’s very, very sorry. If you show him or Zhu or any of the other crypto grifters any sympathy and let them off with a slap on the wrist, they’ll go right back to the same old grift. Hit them hard enough so they don’t get back up again. It’s the only way they’ll learn.

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Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.