A federal judge in the Southern district of New York overseeing the bankruptcy proceedings of Singapore-based crypto hedge fund Three Arrows Capital (3AC) has approved the delivery of subpoenas to 3AC’s cofounders, Su Zhu and Kyle Davies.
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Fast facts
- The subpoenas will require Zhu and Davies to reveal account information, seed phrases, private keys to accounts on both centralized and decentralized exchanges, and any other information related to 3AC’s financial information, within 14 days.
- The judge’s order included additional “discovery targets,” namely hedge fund attorney Hannah Terhune, directors Mark Dubois and Cheuk Yao Pau, and Kelly Chen, the wife of Kyle Davies.
- 3AC filed for Chapter 15 bankruptcy on July 1, hoping to shield its U.S. assets after a court in the British Virgin Islands reportedly ordered the firm into liquidation a week earlier. Chapter 15 legally protects U.S. assets of insolvent foreign debtors from creditors in the U.S.
- The U.S. Commodity Futures Trading Commission (CFC) and the Securities and Exchange Commission (SEC) have also launched investigations to determine whether the bankrupt hedge fund misled investors about its balance sheet.
- The subpoenas come shortly after pseudonymous Terra whistleblower, FatMan, claimed to have found on-chain evidence that Terraform Labs sold US$450 million worth of UST on the open market, in the three weeks before UST lost its dollar peg.
- While the two wallets selling the UST have been confirmed to belong to Terraform Labs, a Chainalysis report from June pinpoints Terra’s crash to the actions of two other traders, who swapped 185 million UST for USDC in the hours leading up to the crash.
See related article: Recovering crypto from insolvent companies may be easier than you think