3AC Liquidators get Permission to Subpoena Founders

Key Takeaways

  • Liquidators were granted full control of 3AC’s U.S. assets and right to subpoena.
  • Physical whereabouts of 3AC Co-founders unknown. 

Three Arrow Capital’s liquidators acquire permission to subpoena Co-founders Kyle Davies and Zhu Su along with banks and digital asset exchanges tied to the firm. New York Bankruptcy Court on Tuesday granted liquidators given full control of U.S. assets and authorized them to issue subpoenas to founders and other parties with information about the firm.

3AC- which had exposure to TerrraUSD filed for Chapter 15 bankruptcy on July 1, the same day it was served a default notice from battered crypto lender Voyager. The latest court ruling follows lawyers representing the creditors stating the physical whereabouts of 3AC Co-founders Zhu Su and Kyle Davies are “currently unknown.” The firm’s liquidators stated they had stopped by 3AC’s Singapore office, but could not enter because the door was locked.

Zhu Su, one of the founders after nearly a month of inactivity has put out a tweet blaming liquidators for baiting them with respect to StarkWare tokens. In the tweet, he blamed liquidators for not using the Starkware tokens and claimed they baited the company to use information in court. The tweet comes amid the counsel, Adam Goldberg, alleging that the founder duo has not provided “meaningful cooperation” with the liquidators

According to reports, Goldberg said at the Tuesday hearing that liquidators are seeking information from “one or two dozen” crypto brokerages, banks, and other financial institutions, several of which said they couldn’t cooperate until they’re served.

Attorney Adam Goldberg who represents liquidators, now enjoys the power to block the “transferring, encumbering, or otherwise disposing of” 3AC’s U.S.-based assets during the bankruptcy proceedings. Liquidators may have trouble collecting 3AC’s crypto assets if it does not have jurisdiction over the wallets to fulfill unpaid debts.

Goldberg argues that crypto wallets fall under U.S. jurisdiction, and those assets are now subject to his client’s discretion. According to Goldberg, a major part of the motion is to put the world on notice that it is “the liquidators that are controlling the debtor’s assets at this stage.”

There is surging concern that 3AC might transfer or hide its assets from liquidators. According to the court filing, Zhu is attempting to sell a Singapore mansion that could be worth tens of millions of dollars. In June, 3AC-backed NFT firm StarryNightCap has moved its entire collection on SuperRare, totaling 70 works which it has spent over $21M on since August.

3AC, one of the biggest names in the crypto market had over $18 billion in assets in April before the crash of the LUNA token in May pushed them to bankruptcy. Reportedly, 3AC bought 10.9M locked LUNA for $559.6 million. 3AC’s demise has affected custodians and several exchanges in the crypto market. The Singapore-based crypto firm has defaulted on about $1.5 billion in loans from Voyager Digital, and BlockFi.

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