Lawyers representing Teneo, the liquidator for the bankrupt crypto hedge fund Three Arrows Capital, told a U.S. bankruptcy court Thursday morning they aren't making inroads with the firm's co-founders Kyle Davies and Su Zhu as they attempt to track down its remaining assets.
Adam Goldberg, a lawyer with Latham and Watkins who represents the liquidators, said Davies and Zhu have only handed over “selective” and “piecemeal” disclosures regarding the firm’s remaining assets.
“They do continue to conceal their whereabouts,” Goldberg said of both Zhu and Davis, adding liquidators are seeking the co-founders’ cooperation through any available means.
“We do expect to be before this court again to seek further assistance in the coming days and weeks,” Goldberg added. Goldberg also acknowledged Zhu and Davies gave an interview last week to Bloomberg, their first extended public comments since filing for bankruptcy protection earlier this month.
Neither Davies or Zhu responded to request for comment form Yahoo Finance about Goldberg’s claims.
In Chapter 15 bankruptcy cases, the court will designate a liquidator whose job is to compile a list of the debtor firm’s remaining assets with the end goal of distributing as much of those funds as possible back to creditors.
The amount of money owed to Three Arrows' creditors amounts to a whopping $3.5 billion. To date, liquidators have gained access to just $40 million in assets.
According to court documents, the liquidators have sent 70 subpoenas to banks, crypto exchanges and other parties requesting the financial information needed to liquidate the hedge fund's remaining assets.
The list of creditors makes for a who's who of financially wounded crypto firms which have seen their fortune’s turn since the collapse of Terra's "algorithmic stablecoin" in May. This list includes major crypto firms such as Genesis Trading, Deribit, BitMEX, BlockFi, and Blockchain.com.
Celsius Network and Voyager Digital are also seeking to recover loans made to Three Arrows, as these firms work to repay their own creditors as part of separate bankruptcy proceedings.
Though Three Arrows originally initiated its liquidation in a British Virgin Islands court the case is also being handled in the U.S. and Singapore, with Goldberg saying during the hearing his team is working with their counterparts in the Caribbean and Southeast Asia.
Last week, Zhu and Davies gave an interview to Bloomberg, their first extended public comments since the firm's bankruptcy filing earlier this month.
During their interview, Zhu and Davis downplayed their spending habits. and suggested the firm’s ultimate failure came down to over-borrowing and overconfidence in crypto's bull market, which led to mistakes in risk management and "credit squeeze across the industry" after the collapse of Terra.
“If we were more on our game, we would’ve seen that the credit market itself can be a cycle and that, you know, we may not be able to access additional credit at the time that we need it," Zhu said.
In the interview, the co-founders also said they were "in the process" of moving to Dubai.
As Adam Levitin, Georgetown Law School professor and partner with Gordian Group told Yahoo Finance, the UAE "conveniently does not have an extradition treaty with the U.S."
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