3AC responds to creditors’ accusations of a lack of dialogue

The founder of Three Arrows Capital (3AC), Su Zhu, described the hedge fund creditors’ statements as “bullying” and questioned whether they had fulfilled their obligations during the early stage of the company’s liquidation.

Sadly, our good faith to cooperate with the Liquidators was met with baiting. Hope that they did exercise good faith wrt the StarkWare token warrants. pic.twitter.com/CF73xI8r6n

— Zhu Su 🔺 (@zhusu) July 12, 2022

On July 11, media outlets reported that the founders of 3AC could “transfer or otherwise dispose of assets” before the company’s liquidation. Such concerns arose due to the alleged absence of “meaningful cooperation” — the hedge fund’s Singapore office is not functioning, and communication goes only through their lawyers.

In response, Su Zhu provided a screenshot of the correspondence between Advocatus Law representing their interests and the plaintiffs’ lawyers.

The document shows that the liquidators ignored StarkWare’s offer to acquire 3AC, as a result the hedge fund lost “significant value”. This, according to the founders, was a breach of their obligations. Advocatus Law urged creditors to answer a number of questions related to their actions concerning the expired StarkWare offer.

In another letter, a screenshot presented by Su Zhu, Advocatus Law explained that the involvement of intermediaries was related to the founders of 3AC receiving “threats of physical violence” and their “working under conditions of severe time pressure” due to a request from the MAS.

Representatives attached to the letter a spreadsheet listing the hedge fund’s assets and expressed readiness to update it as additional information becomes available.

Advocatus Law expects creditors to report to the court details of this electronic correspondence. Depending on the response to the communication, the firm will inform when Su Zhu and Davis will be ready for direct dialogue.

According to Reuters, the liquidators received approval to issue subpoenas and file claims against the assets of the bankrupt company. This occurred after Su Zhu and Davis did not attend the bankruptcy court hearing on July 12.

Earlier this June, amid the cryptocurrency market crash, rumours of Three Arrows Capital insolvency surfaced. The trading firm 8 Blocks Capital accused the hedge fund of using client funds to cover margin calls.

The crypto broker Voyager Digital sent 3AC a notice of default due to non-payment of a loan.

ordered the liquidation of the hedge fund. In early July, Three Arrows Capital filed a bankruptcy petition in a New York court.

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