THREE Arrows Capital co-founder Zhu Su ended up in jail in Singapore after liquidators decided to apply maximum pressure following months of sparring over locating the failed crypto hedge fund’s assets.

Days after securing a Singapore court order carrying a four-month prison term for failing to cooperate with the task of winding up the fund, liquidators tipped police off on Sep 29 that Zhu was headed to Changi Airport, sources familiar with the matter said, asking not to be identified discussing private information.

The liquidators had been monitoring Zhu in Singapore, where he is known to host gatherings for crypto executives at his luxury mansion in the upscale Yarwood neighbourhood, one of the sources said. They then tracked a car travelling to the airport from the mansion, the source said.

Police were alerted that Zhu could be in the car and detained him when he emerged at the terminal, the source said. Singapore authorities on Oct 5 confirmed the arrest of an unnamed 36-year-old man at 2.50 pm on Sep 29 at the airport when asked whether Zhu had been detained.

Committal order

The directive that landed Zhu in jail is a committal order. The liquidator, Teneo, said on Sep 29 that it had obtained such orders for Zhu and Three Arrows’ other founder, Kyle Davies. The orders are civil matters and neither man has faced any criminal charges in Singapore. As a result, the police were not actively looking for Zhu and only acted when tipped off by the liquidators.

Three Arrows imploded in 2022 as leveraged bets blew up, stoking a US$2 trillion digital asset rout that contributed to a spate of other collapses in the sector. Liquidators have accused Zhu and Davies of failing to cooperate meaningfully with their probe and are seeking to recover US$1.3 billion from the two.

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Zhu and Davies are among the onetime darlings of crypto’s pandemic-era bull run whose reputations subsequently suffered as boom turned to bust, exposing risky practices. Chief among the fallen moguls is Sam Bankman-Fried, who is on trial in the US for allegedly overseeing a multibillion US dollar fraud at the now defunct FTX exchange. Bankman-Fried has denied the charges against him.

Zhu and his legal representative did not respond to requests for comment. Teneo declined to comment. Singapore’s police force said it had nothing further to say beyond its Oct 5 statement.

Locating Davies

A committal order puts a person on a no-fly list, so Zhu would have likely been detained by immigration had he reached the checkpoint, the sources said.

Liquidators are in touch with authorities around the world in their effort to locate Davies and are putting the word out in the crypto community that they are determined to find him, one of the sources said.

Davies did not respond to a request for comment.

The liquidators will seek permission from authorities to visit Zhu in Changi Prison to get the information they need about Three Arrows’ assets and may take further steps to force compliance if he refuses to meet, the sources said.

Jail conditions

Typical conditions in Changi Prison include four inmates to a cell sleeping on straw mats on the floor rather than on beds. In contrast, Zhu’s mansion in Yarwood is a two-story, six-bedroom home he and his wife purchased in 2021 for S$48.8 million under a trust, public records show.

Zhu has previously said that his and Davies’ good-faith efforts to cooperate with liquidators “was met with baiting”. In e-mail correspondence submitted to a New York bankruptcy court by the liquidators, counsel to Davies and Zhu have said that court orders the liquidators have obtained are “baseless”.

Singapore’s central bank in mid-September imposed nine-year prohibition orders on both men for transgressions at Three Arrows, faulting the fund for risk management failings and providing false information.

Dubai authorities in April reprimanded Zhu and Davies, along with others, for operating and promoting the OPNX crypto exchange without the required local licence. Zhu has previously said he and Davies contributed initial ideas for OPNX but are not involved in daily management.

Three Arrows was viewed as among the largest and most successful crypto hedge funds before it collapsed. It shifted registration to the British Virgin Islands after having previously operated out of Singapore. A British Virgin Islands court appointed Teneo in June last year to liquidate the fund’s assets. BLOOMBERG