Three Arrows Capital Says Cooperation With Liquidators Met With 'Baiting'

Three Arrows Capital (3AC) co-founder Su Zhu broke a month-long silence today, taking to Twitter to post screenshots of a recent email from Advocatus Legal LLP, the law firm acting on behalf of 3AC, sent to legal representatives of the Singapore-based firm’s liquidators.

One of the letters that have been made public accuses Russell Crumpler and Christopher Farmer, who were appointed by a British Virgin Islands court to serve as 3AC’s liquidators, of “baiting” both Su and Kyle Davies, the fund’s other co-founder.

“Sadly, our good faith to cooperate with the Liquidators was met with baiting,” Su Zhu tweeted.

3AC filed for Chapter 15 bankruptcy protection in June after the collapse of Voyager, which had unpaid loans to 3AC totaling $646 million.

3AC report 'threats of physical violence'

In a July 8 filing with the U.S. Bankruptcy Court in New York’s Southern District, Russell Crumpler and Christopher Farmer reported that the 3AC founders “have not yet begun to cooperate with the [proceeding] in any meaningful manner.”

The filing also alleged that the whereabouts of both Zhu Su and Davies were unknown and that there was a “heightened risk” Su and Davies could attempt to transfer the firm’s assets to outside accounts.

In its letter, Advocatus Legal LLP, however, asked the liquidators whether the court filings mentioned the “threats of physical violence” that the 3AC founders and their families were receiving.

3AC’s legal counsel also noted that their clients “have been working under a lot of time pressure” as they fielded queries from the Monetary Authority of Singapore (MAS).

The letter further added that Su and Davies "will not be proceeding with the call this evening," referring to a discussion between 3AC and liquidators slated for today. The firm's legal counsel added, "depending on your response, we will let you know when our clients can reasonably be expected to speak with you."

Unpacking Starkware token warrants

The second email Su shared today is also notable as it accuses the liquidators of failing to exercise an agreed StarkWare token purchase offer, which “has caused [3AC] to lose substantial value.”

It’s also worth mentioning that 3AC participated in StarkWare’s $75 million Series B funding round in March 2021.

Israel-based StarkWare is working on an Ethereum layer-2 scaling solution called Starknet; however, unlike many other competitors in the space, the project is yet to launch its own token.

Some have speculated that the token warrants mentioned by the 3AC legal counsel hint that a native token could be in sight.

Decrypt reached out to a StarkWare representative for comment but did not hear back at the time of writing.