Where in the world are the 3AC founders? Speculation abounds

The creators of Three Arrows Capital are missing. According to reports, when court-appointed liquidators recently visited the firm’s Singapore headquarters, all they discovered was a locked door and a stack of outdated mail.

Singapore-based 3AC is among the flagship cryptocurrency firms that have crumbled in recent weeks under bear pressure and faced liquidity issues driven by the market sell-off.

In June, a court in the British Virgin Islands, where 3AC had moved its registration, appointed consulting firm Teneo to liquidate 3AC’s assets.

Teneo senior managing directors Russell Crumpler and Christopher Farmer informed the court on July 8 that the whereabouts of Su Zhu and Kyle Davies, the co-founders of 3AC, were still unknown.

Most recently, a Singapore court approved Teneo’s petition order against 3AC issued in the British Virgin Islands. This recognition will give Teneo the legal ability to request access to 3AC’s financial records kept in Singapore.

David Lesperance, a lawyer with over 30 years of experience as a taxation and citizenship adviser, told Cointelegraph that he believes the founders have availed themselves of a backup plan and gone underground. Pioneer founders in previously unregulated industries, such as gaming and crypto, need to maintain a power balance when regulators inevitably come calling.

He added that it is best to maintain parity in the relationship when negotiating to adjust business practices to the newly established standard. This is best done at a distance, where it is difficult for the regulator to bully. According to Lesperance, this allows the company lawyers to negotiate with liquidators, courts and regulators on an even playing field.

Lesperance further explained that in the 1990s, former New York Attorney General Elliot Spitzer mastered the technique of nabbing CEOs and making them do the “perp” walk. Then, hours before the market’s opening bell, Spitzer would call up the board and offer them a plea bargain deal. Negotiating from a position of great weakness, the boards would capitulate and concede to charges that — per Lesperance — Spitzer really had no real chance of “winning at trial, solely to save the company’s share price.” 

“During the time that online gaming and sports book sites were coming into their own, I had several founder clients who successfully stayed out of the clutches of overzealous American prosecutors while their corporate lawyers adjusted their businesses to new United States regulatory rules that had been pushed through by their brick-and-mortar Vegas competitors,” Lesperance said, adding:

“These founders continued to legally live and operate in more friendly jurisdictions during this negotiation period. Their competitors, who fell into the hands of the U.S. authorities during this period, saw their businesses collapse and were subsequently bought up for pennies on the dollar by my clients.” 

He added that now that the founders of 3AC have fled Singapore, investor suspicions have been strengthened that the firm was an illegitimate operation. To add to this point, 3AC once boasted that it had around $10 billion worth of assets under management, leaving some in the space to believe that the recent bankruptcy filing was a cover-up for the founders’ escape plan.

The Three Arrows founders have provided a spreadsheet with details of the company’s assets to the liquidators, according to a post from Zhu’s verified Twitter account.

Sadly, our good faith to cooperate with the Liquidators was met with baiting. Hope that they did exercise good faith wrt the StarkWare token warrants. pic.twitter.com/CF73xI8r6n

— Zhu Su (@zhusu) July 12, 2022

The 3AC co-founders will continue working to find details of other assets but are displeased with the behavior of the liquidators, according to the tweet. The hedge fund’s liquidators traveled to Three Arrows’ office address in Singapore in late June in an attempt to track down the…