In the latest development of a series of high-profile detentions within the cryptocurrency industry, authorities arrested Su Zhu, co-founder of the embattled crypto hedge fund, Three Arrows Capital. The 36-year-old Singaporean national was apprehended on Friday afternoon at Changi Airport as he attempted to leave the country. This move comes in the wake of a “committal order” issued by the Singaporean court, citing Zhu’s deliberate non-cooperation with investigations led by Teneo. As a consequence, Zhu has been sentenced to four months’ imprisonment.
A parallel committal order has also been issued against Zhu’s co-founder at Three Arrows Capital, Kyle Davies. However, Davies’ whereabouts remain undisclosed at this time, according to a spokesperson from Teneo. Simultaneously, the Monetary Authority of Singapore has imposed a nine-year ban on both Zhu and Davies from engaging in regulated investment activity.
Zhu and Davies established Three Arrows Capital in 2012 after completing their education at Columbia University and gaining experience as derivatives traders at Credit Suisse. Zhu garnered recognition in the crypto sphere for accurately predicting the bottom of bitcoin’s “crypto winter” in 2018, when the coin’s value plummeted below $4,000. In February 2021, as bitcoin soared above $30,000, Zhu introduced his “crypto supercycle” theory, positing that the cryptocurrency’s value would continue to climb until it mirrored the market capitalization of gold.
However, by late June, Three Arrows Capital faced insolvency in the British Virgin Islands due to losses incurred from the collapse of the algorithmic stablecoin protocol, Terra. Following this setback, Zhu and Davies absconded from U.S. jurisdiction and launched a new venture, OPNX, allowing investors to trade bankruptcy claims of crypto companies.
The arrest of the crypto hedge fund co-founder is part of a broader trend of crypto industry figures encountering legal troubles amid a wave of business failures and fraud scandals, resulting in sharp declines in cryptocurrency valuations. Alex Mashinsky, former CEO of crypto lending platform Celsius Network, is currently embroiled in a lawsuit filed by the state of New York over alleged crypto fraud. Likewise, Do Kwon, CEO of Terraform Labs, faces multiple counts of fraud charges in the U.S. and was apprehended in Montenegro. Meanwhile, Sam Bankman-Fried, founder of the FTX exchange, is incarcerated in Manhattan, awaiting the commencement of his trial on October 2nd.
These recent detentions within the crypto sector underscore the volatility of the financial industry and serve as a poignant reminder of the numerous individuals and enterprises who have regrettably suffered financial losses during the tumultuous four-year crypto bull cycle.
Source: Yahoo Finance