Authorities have arrested Su Zhu, a co-founder of the now-bankrupt digital asset hedge fund Three Arrows Capital (3AC), in Singapore. Zhu was apprehended at Changi Airport while attempting to leave the country. The arrest follows his failure to comply with court orders related to investigations into creditors’ claims and the collapse of the multibillion-dollar fund.

Both Su Zhu and co-founder Kyle Davies have been sentenced to four months in prison as a consequence of their non-cooperation with the ongoing investigations. However, the whereabouts of Kyle Davies remain unknown.

Three Arrows Capital, at its peak in 2022, managed approximately $10 billion in assets, making it one of the most prominent crypto hedge funds globally. Unfortunately, the fund filed for bankruptcy in mid-2022 due to a combination of plummeting cryptocurrency prices and a particularly risky trading strategy. The financial turmoil rendered the fund unable to repay its lenders, leading to a cascade of bankruptcies across the cryptocurrency sector.

The Singapore Courts ruled against Su Zhu for deliberately failing to adhere to court orders, which compelled him to cooperate with Teneo, the financial advisory firm handling 3AC’s liquidation. While Zhu is now in custody, the focus is on matters pertaining to 3AC, particularly the recovery of assets belonging to the fund or those acquired using its funds. Teneo, the appointed liquidator, also mentioned the possibility of seeking further court orders against Zhu.

Kyle Davies, the other co-founder of 3AC, remains at large. Authorities have issued a committal order for his arrest, with instructions to ensure his safe apprehension so he can serve his four-month prison sentence.

Teneo, the financial advisory firm overseeing 3AC’s liquidation, stated, “Throughout the process, the liquidators’ priority has been recovering the assets of 3AC and maximizing returns for its creditors.” This indicates their commitment to addressing the aftermath of the fund’s collapse and pursuing legal action against those responsible.

In a previous development, Davies and Zhu were reportedly attempting to attract investors for a distressed debt marketplace named GTX in January. GTX aimed to capitalize on the wave of bankruptcies in the industry.

The Monetary Authority of Singapore, responsible for regulating investment activities, has barred both co-founders from engaging in regulated investment activities for a period of nine years, according to Teneo.