Early this month, Singapore-based cryptocurrency hedge fund, Three Arrows Capital, filed for bankruptcy.
For the uninitiated, hedge fund is like a pool of money managed by a person (or a company). The person, often called the Chief Investment Officer, can invest the money in any way he desired, as long as the returns are positive. This means that even if the market is going down (e.g. a recession), the CIO can still grow the money.
Only the super-rich can invest in hedge fund as it’s too risky for retailer investors like you and me. However, the returns are usually good—though there might be some bad hedge funds.
Usually, people working in hedge fund firms are rich, too: to know more about how hedge fund works, you can watch Billions on Netflix.
While hedge funds aren’t new, cryptocurrency hedge funds are: the funds usually focus just on cryptocurrencies.
And as you might know, it isn’t a good year for cryptocurrencies, and so, it’s kind of expected that Three Arrows Capital, which claimed to have USD$10 billion in its assets under management in March this year, had to file for bankruptcy.
The Fall of Three Arrows Capital
Hedge funds would sometimes also borrow money so that they’d have enough to invest for higher returns. After all, a 1% return of $1 billion is a whopping $10 million worth of “profit”, while a 1% return of $100 million is only $1 million worth of “profit”.
And well, this is when shit hits the fan, because Three Arrows Capital invested heavily in LUNA as well, and we all know what happened to LUNA.
They were unable to meet margin calls last month—simply put, they need to return some money because they’ve invested some money they “borrowed”, but couldn’t return—and so, they had to file for bankruptcy.
To simplify things, just think of the hedge fund as a business: it’s losing money and creditors are asking for money, so they had to sell off all their assets (that might or might not be making money) to return the cash to the creditors.
Okay, so it’s just another day in the cryptocurrency world, right?
Founders of Three Arrows Capital MIA
While the firm is based in Singapore, the bankruptcy was filed in the US.
The two founders, Zhu Su and Kyle Livingstone Davies, haven’t been cooperative in the liquidation process—a process to sell off the firm’s assets to pay off creditors.
And because of that, the court in the US scheduled an emergency hearing to hear out what the liquidators have to say.
It turned out that the liquidators haven’t been able to locate the two founders in Singapore, and the liquidators believed that they could “whisk away 3AC’s cryptocurrency assets”.
In other words, run away with the money from the hedge fund lah.
They had gone to Three Arrows Capital office in Singapore, but the door was locked with mails piled up at the entrance.
According to their neighbours, the office has been vacant since late May or early June, when the Terra-Luna collapsed.
Their office is located at Suntec City Tower One.
Zhu Su Selling Good-Class Bungalow
Last year, Zhu Su became the talk of the town when it was reported that he was buying a Good-Class Bungalow in Yarwood Avenue (in Bukit Timah) for $48.8 million…as a trustee for his 3-year-old child. Just think of the child as the temporary owner of the house.
The Singapore citizen, who was born in China, was reportedly looking to sell the house urgently after his company filed for bankruptcy.
Have They Fled Singapore?
According to investing.com, the founders have since fled Singapore days ago.
The lawyers involved in the liquidation process also told the court that the founders “are rumoured to have left Singapore”.
The founders have often been active on Twitter, but haven’t posted anything since the firm went under.
Zhu Su’s last tweet was on 15 June, while Davies’ last tweet was on 6 June.
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Featured Image: Twitter (@zhusu) & Google Maps
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