- Three Arrows Capital’s Su Zhu has broken his silence for the first time in four weeks as his firm battles through its insolvency crisis.
- Zhu shared an email exchange claiming that his firm had suffered from “baiting” from liquidators after discussions it agreed to were later used in court filings.
- The email exchange accuses 3AC’s liquidators of agreeing to exercise a StarkWare token offer then pulling out without warning.
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Zhu took to Twitter to share an email exchange claiming that unnamed liquidators had tricked 3AC into discussions and failed to exercise a StarkWare token option they had committed to accepting.
Su Zhu Breaks Silence on 3AC Crisis
Su Zhu has shared an update on the Three Arrows Capital saga.
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
In a Tuesday tweet, Zhu said that his distressed crypto hedge fund, popularly known as 3AC, had been baited by unnamed liquidators. Zhu shared screenshots of two emails from 3AC’s legal team, Advocatus Law LLP, claiming that the liquidators had tricked the firm into discussions “without prejudice” to gather evidence for court filings. The note added that 3AC had a “desire to work reasonably” with the liquidators to repay its obligations. It also said that 3AC’s families had received threats over the firm’s recent collapse and been contacted by Singapore’s central bank and would seek “appropriate sanctions” over the alleged baiting. An excerpt read:
“Please let us know if you stated in your Court filings that we explained that our clients, and their families have received threats of physical violence, and have had to field enquiries with the Monetary Authority of Singapore in the last week, or so, which has meant they have been working under a lot of time pressure. In this regard, please immediately let us have copies of the Court filings. Given that your filings appear to have already been given to the media, we trust that you will have no issue in providing us with these documents.”
Is StarkWare Launching a Token?
The second email Zhu shared accused the liquidators of agreeing to exercise a StarkWare token offer by Jul. 5 then reneging on the offer without warning, hitting their creditors with losses. “Our clients believe that your omission to exercise the Company’s rights to the StarkWare Exercise has caused the Company to lose substantial value,” the note read. 3AC led investments in StarkWare and Zhu is one of its creditors. The firm raised $100 million in a Series D funding round this year, hitting an $8 billion valuation. It’s long been speculated that StarkWare will follow other Ethereum Layer 2 projects in launching its own token, in part because it received funding from firms like 3AC, though the rumors have never been confirmed. However, the email exchange shared by Zhu indicates that a token could be on the horizon. Crypto Briefing reached out to a StarkWare representative for comment but did not receive any confirmation or denial on the subject.
Until recently, 3AC was known as one of crypto’s largest hedge funds holding billions of dollars in assets under management. However, it suffered a dramatic implosion in June as the crypto market plummeted, taking other giants down with it as it was revealed that the firm had taken on leverage from creditors and failed to meet a series of margin calls. Though the exact figure is unknown, the firm is believed to owe more than $1 billion to Voyager Digital, Genesis Trading, and other lenders. 3AC has since filed for Chapter 15 bankruptcy, and Zhu and his co-founder Kyle Davies’ whereabouts is unknown. Though it’s unclear which liquidator the emails from Advocatus Law LLP were addressed to, Voyager issued a default notice to 3AC last month over the crisis. 3AC reportedly owes the firm $665 million.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
This article first appeared at Crypto Briefing