Our weekly roundup of news from East Asia highlights some significant developments in the region. One of the major stories involves the co-founder of Singaporean hedge fund Three Arrows Capital (3AC), Su Zhu, who was apprehended at Singapore’s Changi International Airport while attempting to flee the country. This arrest came after Singaporean courts issued an arrest warrant for Zhu due to his failure to comply with a court order. Zhu was sentenced to four months in prison for this breach.
Teneo, the appointed liquidator for 3AC, stated that creditors would seek to engage with Zhu during his imprisonment to recover assets belonging to 3AC or acquired using its funds. The liquidators are determined to ensure Zhu complies with the court order even after his release from prison. Meanwhile, 3AC co-founder Kyle Livingston Davies, who fled to Dubai earlier this year, was also sentenced to four months in prison for contempt of court. His current whereabouts remain unknown.
The Monetary Authority of Singapore has also barred Zhu and Davies from conducting enterprise investment activity in the city-state for nine years due to regulatory violations. These violations include exceeding 3AC’s statutory assets under management limit.
The collapse of 3AC occurred in July 2022 after a series of failed leveraged trades on the Terra ecosystem. This led to the bankruptcy of 3AC and left creditors with claims amounting to over $3.5 billion. The bankruptcy also affected 3AC’s counterparties, including Celsius, Voyager, and FTX, who also went bankrupt.
Prior to the recent events, 3AC creditors faced a setback when a U.S. judge halted over a year of bankruptcy proceedings due to a clerical error. However, they are now determined to recover assets and maximize returns for creditors.
Zhu and Davies had both embarked on alternative entrepreneurial ventures after the collapse of 3AC. Davies opened a restaurant in Dubai, while Zhu’s luxury property in Singapore was converted into an eco-farm owned by his wife, Evelyn Tan. The farm is open to invited guests and also runs a private dining experience.
In addition to the ongoing developments involving Zhu and Davies, the novel exchange OPNX, which they co-founded, has faced challenges. The platform, which traded bankruptcy claims on fallen crypto companies, experienced a significant drop in its token value following Zhu’s arrest and Davies’ indictment. The Open Exchange Token lost nearly 60% of its value in a single day and has lost 79% of its value in the past month.
Despite attempts to distance themselves from the platform, the executives of OPNX were fined $2.7 million by Dubai’s Virtual Asset Regulatory Authority for running the exchange without a license. The claims dashboard of the platform remains dysfunctional at present.
Despite these challenges, 3AC Ventures, a venture capital fund created by Zhu and Davies, has continued its investment activities. The fund has expanded its investments to include a project called “Gamerlan” after its initial investment in Raise.
Creditors are focused on recovering the assets of 3AC and maximizing returns. Teneo has already auctioned several nonfungible tokens owned by 3AC, netting a total of $13.4 million. The proceedings to recover assets are still ongoing.
These developments in East Asia reflect the ongoing challenges and repercussions faced by the cryptocurrency industry. The actions taken against Zhu and Davies, as well as the bankruptcy of 3AC and its counterparties, highlight the need for regulatory compliance and oversight in the digital asset space.