No more surfing? Su Zhu, one of the founders of the bankrupt crypto hedge fund Three Arrows Capital (3AC), was apprehended at Singapore’s Changi Airport. 

He will spend four months in prison under an arrest order granted by Singapore courts.

• Why? He refused to comply with an order to cooperate with investigations into 3AC. 
• The company’s liquidators, Teneo, confirmed the news last Friday.

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🔢 It’s a numbers thing

Boy math is having $10B in assets and…mishandling them? Once a pillar in the crypto space, 3AC filed for bankruptcy in July last year after failing to repay their lenders. 

But how did that happen, exactly? 

• May ‘22. The Terra/LUNA stablecoins went down, which dealt a huge blow to 3AC (they invested $200M in LUNA). 
• June ‘22. 3AC was ordered to liquidate by a court in the British Virgin Islands. A Financial Times report also said that 3AC failed to meet its margin calls.
• July ‘22. 3AC filed for Chapter 15 bankruptcy. 

As of June this year, Teneo is seeking $1.3B from Su Zhu and his co-founder, Kyle Davies. 

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📉 ‘I declare bankruptcy!’

When 3AC fell though, they triggered a domino effect on other crypto companies, who relied on their money and ability to stay afloat in an already risky market. 

Some of the companies that were affected were:  

• Blockchain.com, which had lent $270M in cash and crypto to 3AC, attempted to sell off assets and conducted more layoffs earlier this February. 
• Voyager Digital also filed for bankruptcy after 3AC failed to pay its loans; their assets were supposed to be acquired by Binance US, but Binance broke the deal off. 
• Crypto lender Genesis, which was exposed to both 3AC and FTX, laid off 30% of its employees and filed for Chapter 11 bankruptcy at the beginning of the year.  

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🏃The situation

While they were active in social media, both founders were difficult to get ahold of. Davies’ location is currently unknown. 

• Before Su Zhu’s apprehension, this New York Times interview reported that he and Davies were relaxing (and surfing!) in Bali.