Liquidators say they can't find Three Arrows Capital founders Kyle Davies and Zhu Su, and seek to subpoena them to prevent the dissipation of the fund's assets
The founders of bankrupt crypto hedge fund Three Arrows Capital haven't been cooperating in the firm's liquidation process …
Context & Ripple Effects
Three Arrows Capital moved from an uncertain post-liquidation position after a $400M-plus liquidation to a creditor recovery process complicated by its founders’ reported lack of cooperation. The liquidators’ inability to locate Kyle Davies and Zhu Su makes court-backed disclosure central to tracing and preserving the fund’s assets.
That enforcement path later escalated into subpoenas delivered via Twitter and a $1.3B recovery claim against the co-founders, underscoring that access to records and founders was a core constraint on the liquidation.
First-order effects
- Three Arrows Capital’s liquidators will seek subpoenas for Davies and Zhu Su, increasing legal pressure to produce information and limiting opportunities for assets to be dissipated during the wind-down.
- Davies and Zhu face a more formal recovery process after having resisted cooperation with the liquidators.
Second-order effects
- Creditors’ prospects become more dependent on what the subpoenas reveal about the fund’s assets, transfers, and liabilities, rather than solely on assets already under the liquidators’ control.
- The dispute pushes the liquidation toward cross-border enforcement, as later actions against the co-founders in the British Virgin Islands show.
Third-order effects
- The 3AC case points to a harder enforcement environment for failed crypto investment vehicles: recovery can hinge on compelling founder disclosures when asset custody and decision-makers span jurisdictions.
The trend: Crypto-fund insolvencies are increasingly testing whether liquidators can convert opaque, cross-border asset structures into enforceable creditor recoveries.