A federal judge overseeing the bankruptcy proceedings of Three Arrows Capital (3AC) has signed a order approving summons to former 3AC leadership, including co-founders Su Zhu and Kyle Davies.
The summons obliges the founders to deliver any “recorded information, including books, documents, records and papers” in its custody relating to the property or financial affairs of the company.
The notorious hedge fund, valued at $10 billion at its peak, filed for Chapter 15 bankruptcy on July 1, with its problems tied to excessive leverage and the collapse of Terra Luna (LUNA), now known as Terra Classic (LUNC), and its algorithmic stablecoin formerly known as TerraUSD (UST).
Since then, the liquidators —consulting firm Teneo—have attempted to locate the company’s assets and locate the co-founders of 3AC.
The latest order allowing the service of subpoenas will require recipients to provide all account information, seed phrases and private keys of your digital and fiat assets, details about unregistered securities and shares, and any accounts held on centralized or decentralized exchanges, along with any other tangible or intangible assets.
The order also labels hedge fund lawyer Hannah Terhune, directors Mark Dubois and Cheuk Yao Pau, and Kelly Chen—wife of co-founder Kyle Davies—as “discovery targets.”along with trading desk firm Tai Ping Shan Limited, venture capital firm DeFiance Capital, 3AC-backed NFT fund Starry Night Capital and all their associates.
All persons served with the subpoena must comply with it within 14 daysunless the parties agree otherwise.
At the time of writing this article there was no solid information on the whereabouts of Zhu or Davies. Zhu is rumored to reside in Dubai and Davies this on the Indonesian island of Bali. Both have been active on social media commenting on the events surrounding the collapse of FTX and Alameda Research..
Claim: Terraform Dumped $450 Million In UST Before Bankruptcy
In the meantime, self-proclaimed Terra whistleblower FatMan has made new claims on Twitter that it was Terraform Labs’ own actions that led to the decoupling or lack of parity from TerraUSD (UST), now TerraClassicUSD (USTC)in May, that is, the opposite of a concerted attack.
Having said that, not everyone is convinced of the theory or that the information is new.
In a December 6 Twitter thread, FatMan cited “bomb data” from anonymous researcher Cycle_22, who allegedly discovered that two trading wallets—verified to be owned by Terraform Labs—had dumped $450 million worth of UST on the open market in the three weeks prior to the disassociationexplaining that:
“TFL has been perpetrating the narrative that UST was ‘hit’. This is a false argument.”
“In fact, TFL itself weakened the Curve pool by irresponsibly dumping a massive amount of UST in a short space of time. This reduced liquidity and severely weakened the peg,” FatMan said.
December 6, 2022: New on-chain data indicates TFL sold $450m in UST in the weeks leading up to the UST collapse, greatly exacerbating if not directly causing its demise. https://t.co/ijPMo0XqVt
—FatMan (@FatManTerra) December 6, 2022
December 6, 2022: New on-chain data indicates that TFL sold $450 million worth of UST in the weeks leading up to UST’s collapse, greatly aggravating, if not directly causing, its demise.
However, some Twitter users responding to the thread have claimed that it was “public knowledge” that TFL was withdrawing UST from a Curve liquidity pool (3Pool) in preparation for seeding its new stablecoin liquidity pool (4Pool) who was working with Frax Finance at the time.
Others, like Twitter user RyanLion, they said that it had been “clearly communicated” that UST trades in the Curve liquidity pool were part of UST trade moves in other stablecoins to buy bitcoin (BTC) for Luna Foundation Guard reserves.
A June blog from blockchain company Chainalysis said that while Terraform Labs withdrew millions of UST from 3Pool at the time (approximately 150 million), it was the actions of two traders in the next hour—the exchange of a total of 185 million UST for USDC and TFL’s response to that—that led to the untying and resulting panic selling.
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