Founders of bankrupt crypto hedge fund 3AC go missing

https://www.cnbc.com/2022/07/12/founders-of-bankrupt-crypto-hedge-fund-three-arrows-go-missing.html

by woofyman • 4 years ago

66 23 4 years ago

cnbc.com

chenster• 4 years ago

WTFFFF

nytesky• 4 years ago

So maybe we are working towards a trilogy?

https://www.entrepreneur.com/article/423721

trdtaylor1• 4 years ago

Seems the old adage of 'if you owe someone x dollars, it's your problem. If you owe someone xxx dollars, it's their problem' applies.

rchaud• 4 years ago

If they've absconded, that tells me that they owe money to people that are looking to show them that it's in fact not just their problem.

phabricator4• 4 years ago

Failed hedge funds aren't new. Can someone with more knowledge explain why liquidating this one is so much more difficult than traditional ones?

What's the next step here, SEC lawsuits?

fny2• 4 years ago

It's crypto. It's not like the assets are sitting in traditional accounts that can be force liquidated by court order.

SEC? Lol. If these guys have run off (reading the article it doesn't seem like it), the lenders are screwed. A fraction of $10 billion can buy you a lot of protection especially in crypto safe havens like El Salvador--most of which happen to be hotspots for organized crime.

woofyman2• 4 years ago

//It's not like the assets are sitting in traditional accounts that can be force liquidated by court order.

Yes they can unless they want to go to jail.

Animats• 4 years ago

Are there "Wanted, Dead or Alive" smart contracts yet?

jonathan-adly• 4 years ago

traditional hedgefund money is in a bank - a court can freeze their account, give it to their creditors, seize any new money that goes in it, etc.

Crypto hedge-funds money is a cold-wallet protected by a 12 words phrase (some anyway - if they are smart). No one can really get to them.

(yes - the founder can go to jail. But, funds could stay locked forever)

phabricator4• 4 years ago

Crypto hedge-funds money is a cold-wallet

Is this the case here, specifically? (I assume so, just curious)

woofyman2• 4 years ago

Given a choice between life in jail or turning over the coins, I know what I would do.

thesausageking• 4 years ago

Crypto or not, when a large, heavily leveraged hedge fund implodes, it's really complex to unwind. It was the same when Bill Hwang's Archegos Capital failed last year:

https://en.wikipedia.org/wiki/Archegos_Capital_Management

The day they got wiped out, the liquidations caused a 27% drop in share price of ViacomCBS. The various lawsuits and charges of fraud and racketeering will take years to work their way through to completion.

phabricator4• 4 years ago

Are there other crypto funds that are structured to handle a failure better?

I know it's crypto but it's shocking to see people invest in a suitcase stuffed with dollar bills.

rich_sasha2• 4 years ago

Hedge funds usually have an administrator who holds the money. This is a big, reputable organisation, usually tied to a bank and heavily regulated. it permits the fund to trade within a narrow mandate agreed with fund investors. If the HF managers disappear, the assets, perhaps with heavy losses, remain with the administrator. The administrator answers first and foremost to fund investors.

The article suggests, and it's not uncommon with crypto hedge funds, that funds were held in private wallets. So if Su Zhu disappears one day with his Ledger, that's that.

Having external administrators for classic HFs wasn't the norm until Bernie Madoff (who didn't have an administrator), funny that.

hiq• 4 years ago

https://twitter.com/zhusu/status/1546801270014758912

Snackchez• 4 years ago

I’m not sure if they’re missing. Zhu Su reinstated his Twitter account and tweeted 6 hours ago

https://twitter.com/zhusu/status/1546801270014758912?s=21&t=...

strangattractor• 4 years ago

Someone tweeting is not the same as knowing where they are physically located so they can be server legal papers or taken to jail.

Canada• 4 years ago

They are not, to my knowledge, being sought for arrest at this time, I don't see any reason why they have to make their physical locations known. Their lawyers are clearly available to be served documents.

LatteLazy• 4 years ago

This is why fund administrators and custodians are things...

phabricator4• 4 years ago

Crypto admin and custodian services exist though. If the allegations are true it sounds like scammy people just ran a scam, and crypto made it easier.

Founders of bankrupt crypto hedge fund 3AC go missing

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