The Co-Founder of the collapsed crypto lending platform Three Arrows Capital (3AC), Su Zhu, has been questioned in a court in Singapore. This investigation, as reported by Bloomberg, marked a significant step in the search for a solution by the company's liquidators seeking to recover $3.3 billion for creditors.

This interrogation, which was conducted for two days, sought to unravel the mysteries surrounding the collapse of 3AC and the whereabouts of its assets. The liquidators have accused Zhu and his Co-Founder, Kyle Davies, of obstructing investigations, aiming to recover $1.3 billion from the duo.

Zhu's interrogation, conducted by lawyers representing the liquidator Teneo, delved into the failure of 3AC and the loss of customers’ assets. Despite the private nature of the proceedings, the media publication reported, citing insiders, that Zhu's detainment in September played an important role in the inquiries.

Liquidators Target $1.3 Billion Recovery from Zhu and Davies

Liquidators have accused Zhu and Davies of obstructing investigations, aiming to recover a staggering $1.3 billion from the duo. However, neither Zhu nor Davies have faced criminal charges in Singapore. The information obtained from these inquiries is poised to be shared with creditors.

In September, Zhu was arrested in Singapore, culminating in the downfall of 3AC. The charges brought against him include alleged mismanagement of customers' funds and debt default. Before the collapse of the crypto lender, 3AC boasted investments in high-profile projects like LUNA, Aave, Avalanche, BlockFi, Deribit, and Solana. However, its troubles began with the crash of LUNA in May, triggering a cascading effect in the crypto industry.

Breaking: ZHU Su, co-founder of failed crypto hedge fund Three Arrows Capital, was apprehended at Changi Airport whilst attempting to travel out of Singapore on Friday (Sep 29) afternoon. Businesstimes reported. https://t.co/W01HoeQYCu pic.twitter.com/TwvRuFKbxw

— Wu Blockchain (@WuBlockchain) September 29, 2023

3AC's Regulatory Setback

Despite managing $18 billion in cryptocurrency assets at its peak, 3AC failed to meet margin calls in June last year, raising doubts about its financial stability. In response to regulatory lapses tied to the operation of the fund, the Monetary Authority of Singapore banned the duo from participating in the city-state's financial services sector for nine years.

The financial watchdog affirmed that neither Zhu who held the position of Chief Executive Officer, nor Kyle Livingston Davies, the Chairman of 3AC, could engage in management roles or act as directors in any capital market services firm in Singapore.

Founded in 2012, 3AC's downfall extended far beyond its immediate stakeholders. The rival crypto lender Voyager Digital was unable to recover its debt from the company, leading to its bankruptcy Bankruptcy Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the co Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the co Read this Term. This event caused a domino effect with damages exceeding $3 billion, impacting several companies in the crypto space.