Three Arrows Capital Founders Face Regulatory Scrutiny Amid Crypto Crash Aftermath
Regulatory Investigations Intensify
The collapse of Terra (LUNA) and its stablecoin Terra (UST) has led to significant legal troubles for Three Arrows Capital (3AC) founders Kyle Davies and Su Zhu. U.S. regulators, including the SEC and CFTC, are probing the crypto hedge fund for a series of violations that resulted in over $1 billion in investor losses.
The Fallout of Terra's Implosion
The Terra ecosystem's $60 billion collapse triggered a chain reaction, severely impacting 3AC. The founders have faced numerous challenges, including abandoned headquarters in Singapore, detention in Dubai, and even a mysterious yacht deposit. Their evasive actions have further complicated the situation.
Liquidation Efforts and Founder Evasion
Liquidators Crumpler & Farmer report that Davies and Zhu have been unresponsive since July, failing to provide essential documentation, such as access to a safety deposit box containing wallet credentials. This lack of cooperation has hindered recovery efforts.
NFT Transfers and Financial Maneuvers
Approximately 300 NFTs, including high-value assets like Pepe the Frog and Fidenza, were transferred to a Gnosis Safe wallet. Additionally, 3AC recovered $45 million from Convex Finance and Curve, indicating ongoing financial activities despite the founders' elusive behavior.
Legal Battles and Controversy
Su Zhu has criticized the liquidators, claiming their cooperation was met with hostility. The founders have also sued their own company for $30 million while evading authorities, drawing comparisons to Do Kwon's legal evasion.
Why This Matters
Three Arrows Capital, once a leading crypto hedge fund, has become a symbol of the crypto market's volatility and regulatory challenges. Investors should stay informed about such developments to navigate the risks and opportunities in the crypto space.
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