Su Zhu, the co-founder of Three Arrows Capital, is expected to be released this month based on standard provisions for good behavior. The development follows a two-day court hearing in Singapore where Zhu faced questioning for the first time.

During the hearing, Zhu had to respond to lawyers representing the liquidator, providing insights into how the fund failed and the whereabouts of its assets.

3AC Co-Founder Questioned in Singapore

The court approved Zhu’s questioning after he was arrested at the Singapore airport on September 29 and jailed for four months for failing to cooperate with the task of winding up Three Arrows. The liquidators sought crucial information, including details on how the fund failed and the location of its assets.

The proceedings between Zhu and Teneo’s representatives are considered a civil matter, and neither Zhu nor Kyle Davies has faced criminal charges in Singapore. The court will share details from the questioning with creditors to maximize recoveries.

Zhu previously claimed that liquidators resisted and baited his and Davies’ sincere efforts to cooperate.  In email correspondence submitted to a New York bankruptcy court, counsel to both co-founders has dismissed the court orders obtained by liquidators as “baseless.”

The co-founders, Zhu and Davies, once considered stars of the crypto’s pandemic-era bull run, saw their reputations fade as the market turned from boom to bust, revealing risky practices. In the aftermath of Three Arrows Capital’s collapse, liquidators have been coordinating with authorities globally to locate Davies, as reported by a source familiar with the matter in October.

Three Arrows Capital Crypto Fund Collapse

In 2022, Three Arrows Capital experienced a collapse as leveraged bets went awry, contributing to a $2 trillion crypto market downturn and causing turmoil in the sector. Liquidators have accused Zhu and Davies of not cooperating meaningfully with the investigation and are seeking to recover $1.3 billion from both individuals. Teneo, the appointed liquidator, estimates that creditors are owed around $3.3 billion.

In September, Singapore’s central bank imposed nine-year prohibition orders on Zhu and Davies, attributing transgressions at Three Arrows to risk management failures and providing false information.

Once regarded as one of the largest and most successful crypto hedge funds, Three Arrows shifted its registration to the British Virgin Islands after operating out of Singapore. A British Virgin Islands court appointed Teneo in June of the previous year to liquidate the fund’s assets.