Fate of crypto investor Zhu Su’s bungalows hangs in the balance after Three Arrows implosion

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THE market is abuzz with speculation over the personal assets of Three Arrows Capital (3AC) founder Zhu Su, following news of the crypto hedge fund’s liquidation order by a British Virgin Islands court on Monday (Jun 27).

As liquidators close in on the insolvent firm, a luxury bungalow in Singapore bought just in December for S$48.8 million by Zhu has been a topic of much discussion by industry observers.

The Yarwood Avenue bungalow is said to be on the market, with a WhatsApp message detailing the urgent sale having made its way around rapidly.

The Business Times was unable to verify the authenticity of the message, but meanwhile, vultures appear to be circling – 1 agent told BT that they had already received offers and expressions of interest for the house.

Another agent noted that potential buyers might steer clear, as the transaction would take place under uncertain circumstances now that Zhu is entangled in the liquidation action.

Zhu and his wife, Tao Yaqiong Evelyn, purchased the Good Class Bungalow (GCB) as trustee for a nearly 3-year-old child.

A key question that has arisen is whether the liquidators of 3AC may have claims on the personal assets of the fund’s founders, or if their reach extends only to the assets held by the fund.

“At present it is not clear if the liquidators have uncovered any basis to apply to court to lift the corporate veil, to make any claim against the personal assets of any errant officer of the company,” said Robson Lee, partner at law firm Gibson Dunn & Crutcher.

According to rules concerning trust purchases in Singapore, properties held in trust are by and large protected from creditors’ claims.

Zhu has several other luxury properties linked to him. Property title searches show another GCB in Dalvey Road, acquired for S$28.5 million in September 2020, is held in the name of his wife. He also owns a Balmoral Road strata landed house in the Goodwood Grand estate, which was transacted in 2019 for S$6.25 million.

Two other properties are said to be linked to Zhu or other 3AC-related parties including 3AC co-founder Kyle Davies – a shophouse, and another GCB in the Pierce/Swettenham area.

3AC-related parties are also said to own several high-end cars, and have a 30 million euro yacht on order, sources told The Business Times.

Zhu built a fortune worth billions with Davies, a fellow ex-trader from Credit Suisse Group, from their early investments in cryptocurrencies. But a recent meltdown in the crypto markets and the Terra Luna collapse has plunged 3AC into crisis. A cryptic tweet by Zhu on Jun 15 fuelled speculation over mounting losses and possible insolvency, sending the industry into a frenzy.

“We are in the process of communicating with relevant parties and fully committed to working this out,” he tweeted, without further explanation.

It later emerged that the firm was unable to repay creditors including crypto broker Voyager Digital, which issued a notice of default to 3AC.

Crypto platform Blockchain.com and Deribit, a crypto derivatives exchange, were among creditors that sought the liquidation of 3AC, Bloomberg reported on Friday.

“We believe Three Arrows Capital defrauded the crypto industry and intend to hold them accountable to the fullest extent of the law,” a Blockchain.com spokesperson told Bloomberg.

3AC’s assets under management (AUM) were estimated to be about US$10 billion in March, according to blockchain analytics firm Nansen. The firm claimed an AUM of about US$3 billion in April before the markets crashed, according to an interview Davies had with The Wall Street Journal in June.

Singapore’s regulator is closing in on the firm. The Monetary Authority of Singapore reprimanded 3AC on Thursday for providing false information and exceeding the AUM it was allowed. Under Singapore’s rules, 3AC was forbidden from managing assets of more than S$250 million.

The regulator has been investigating the contraventions since June 2021, and said it is assessing if there were further regulatory breaches in light of the firm’s insolvency.

Russell Crumpler and Christopher Farmer of consulting and advisory firm Teneo have been appointed joint liquidators of 3AC, according to the liquidation order seen by The Business Times .

source: The Business Times

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