Three Arrows co-founder Zhu Su arrested at Changi Airport, sentenced to 4 months’ prison

ZHU Su, co-founder of failed cryptocurrency hedge fund Three Arrows Capital (3AC), was arrested at Changi Airport while attempting to travel out of Singapore on Friday (Sep 29) afternoon.

He has been sentenced to four months’ prison under a committal order granted by the Singapore Courts, 3AC’s joint liquidator Teneo told The Business Times (BT) in an e-mail update on Friday evening.

A similar committal order with an imprisonment term of four months was granted against 3AC’s other co-founder, Kyle Davies. However, Davies’ whereabouts remain unknown at this point in time, Teneo said.

Teneo had applied for and obtained the committal order against Zhu on Sep 25 due to his “deliberate failure” to comply with a court order that required him to cooperate with the liquidators’ investigations. Zhu was supposed to account for his activities as a co-founder of 3AC and its former investment manager under the court order.

During Zhu’s four-month prison sentence, the liquidators will seek to engage with him on matters relating to 3AC, focusing on the recovery of assets that are either the property of 3AC, or that have been acquired using 3AC’s funds. Teneo may also make applications for further court orders as required.

“Throughout the process, the liquidators’ priority has been recovering the assets of 3AC and maximising returns for its creditors,” Teneo said.

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Zhu’s arrest comes after the Monetary Authority of Singapore (MAS) prohibited him and Davies from conducting regulated investment activity for nine years each, effective from Sep 13.

Zhu was the chief executive of 3AC, while Davies was its chairman. The duo, who met in high school, were widely touted as crypto billionaires and wielded their influence on social media. In 2021, BT reported that Zhu and his wife were in the early stage of buying a Good Class Bungalow under a trustee arrangement, for S$48.8 million.

But 3AC abruptly imploded in mid-2022, after suffering heavy losses from the crash of cryptocurrency Luna and stablecoin TerraUSD. The company was ordered to liquidate in June last year.

MAS later reprimanded 3AC for providing false information to the central bank; failing to notify MAS about changes to Zhu’s and Davies’ directorship and shareholdings; and exceeding the assets-under-management threshold allowed for a registered fund-management company.

Further investigations also showed that the fund failed to have in place a risk-management framework for risks associated with cryptocurrency and digital asset investments.