The founders of Three Arrows Capital, the defunct cryptocurrency hedge fund that filed for bankruptcy this month, are reportedly on their way to Dubai after liquidators said they’d been unable to locate them during bankruptcy proceedings. In an interview with Bloombergg, the pair described the stunning collapse of the firm “regrettable”.
Kyle Davies and Zhu Su were in the spotlight this month after liquidators said they had apparently abandoned their Singapore office and were not giving “meaningful cooperation” in bankruptcy proceedings. The founders did not show up to an emergency court meeting and were reportedly unresponsive in a scheduled Zoom call.
But the pair finally reappeared, and a lawyer representing the two disclosed that the founders were currently en-route to the United Arab Emirates, Bloomberg reported. Davies and Su have previously expressed plans of relaunching their business in Dubai, due to crypto’s popularity in the area and the relaxed regulation compared to Singapore.
“The whole situation is regrettable,” Davies said in the interview with Bloomberg, while the two acknowledged that heavy use of leverage and the firm’s proximity to the bankrupt crypto firm Terra led to their downfall.
The company currently owes $2.8 billion to various creditors and investors, according to a court document made public on Monday, and the firm already defaulted on a $670 million loan from Voyager Digital. Those losses led to subsequent bankruptcies of Voyager and other firms exposed to the hedge fund.
But the two founders dodged questions on the impact their firm has had on the wider space, the report said, with Davies and Su focusing instead on the fact that “they suffered deep losses” themselves.
Su said they’d been on the receiving end of death threats since the firm’s troubles were made public. He also brushed off an accusation by a creditor in court documents that he and Davies used $50 million of company assets as down payment for a luxury yacht, arguing that the yacht was purchased over a year ago and was fully transparent in the company’s records.
“This is kind of smearing of us, I feel, is just a classic playbook of, you know, when this stuff happens, when funds blow up, then you know, these are the kind of headlines that people like to play,” Su said to Bloomberg.
Although an official with the DFSA, Dubai’s financial regulator, said that Three Arrows had not gotten approval to operate in Dubai as of June, Su explained the two were visiting to “assess whether we move there as originally planned or if the future holds something different for us.”
“We feel that it’s just the interest for everyone if we can be physically secured and keep a low profile,” he added.