A United States (U.S.) court has given liquidators permission to subpoena the founders of crypto investment firm Three Arrows Capital (3AC), including Su Zhu and Kyle Davies.
According to a report by Law360 on July 12, U.S. Bankruptcy Judge Martin Glenn issued an order on Tuesday allowing the subpoenas after being told by the counsel for the liquidators that the founders' whereabouts are unknown and there were fears they could be selling off tens of millions in assets.
The counsel, Adam Goldberg, said he didn’t know the current location of Zhu or Davies, alleging the duo have not provided "meaningful cooperation" with the liquidators.
Goldberg raised concerns that 3AC may be selling assets by pointing to media reports that a Singapore property worth “tens of millions” was being sold by Zhu.
A liquidator’s job is to assess the value of an insolvent company or individual and sell the assets in order to fulfill unpaid debts. Liquidators may have trouble collecting 3AC’s crypto assets if it does not have jurisdiction over the wallets.
Presiding Judge Martin Glenn acknowledged that extracting crypto funds from the firm presents “tricky issues” regarding the location of the firm’s crypto wallets.
Bloomberg reported on July 12 that Goldberg contends that the crypto wallets fall under U.S. jurisdiction and those assets are now subject to his client’s discretion. Goldberg said,
“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.”
Three Arrows Capital (3AC) is a high-profile investment firm founded in 2012 and based in Singapore that boasted over $18 billion in assets under management as late as April, but may have lost a significant portion of that net worth after the crash of the LUNA token in May.
Since then, 3AC has defaulted on about $1.5 billion in loans from crypto lenders Voyager Digital and BlockFi.
3AC founders Zhu and Davies have also remained mostly radio silent since June 14, and their location has remained a mystery to the public.
Zhu broke his weeks-long silence on July 12 briefly through a Twitter post condemning the liquidators for baiting him by failing to make a purchase of Starkware tokens.
3AC’s loan defaults have taken part of the blame for Voyager filing for bankruptcy and BlockFi being forced into a position where it could get bought out by FTX.US crypto exchange. 3AC also filed for Chapter 15 bankruptcy on July 1.