Courts Use Twitter To Subpoena Missing 3AC Founders

The U.S. Bankruptcy Court in the Southern District of New York took advantage of the advancement in technology and issued subpoenas to Three Arrows Capital (3AC) founders Kyle Davis and Su Zhu on Twitter on Thursday.

The subpoenas, which compelled the founders to "produce documents, information, or objects or to permit inspection of premises in a bankruptcy case," were released after 3AC liquidators obtained permission from Singapore and U.S. courts.

The subpoenas also demanded several other things, including the founders providing "all documents available to you regardless of whether this information is possessed directly by you, your agents, representatives, employees, or investigators; or by any other legal or non-legal entities controlled by or in any manner presently or precisely affiliated with you."

Moreover, the subpoenas also requested details in a number of formats, including any "digital communications," internal spreadsheets, accounting data, calendars from Three Arrows executives as well as details of the firm's "network access and server activity logs."

And, if the requested documents are no longer available in their custody, control, or possession, the court requires the founders to "state the date and nature of the document and explain why the document is unavailable."

The move was made after liquidators' lawyers repeatedly failed to communicate with the founders over the past months, which they said in a presentation dated Dec. 2 that "a communication protocol was agreed between the liquidators and founders but has not yielded satisfactory cooperation."

Teneo, the advisory firm appointed to liquidate Three arrows Capital's assets, filed a motion in October requesting the U.S. court to grant it permission to subpoena the hedge fund founders using "alternative means."

The unconventional way liquidators used to issue the subpoenas was necessary because the whereabouts of both Su Zhu and Kyle Davis are still unknown. Teneo noted that the traditional means of issuing the subpoenas has not yielded any success in contacting the founders.

"Focused on diligently advancing the liquidation process for Three Arrows Capital Limited in order to maximize asset recoveries on behalf of creditors. The founders have unfortunately resisted cooperating in these efforts, and as such, we have received authority from courts in both the US and Singapore to serve them targeted and comprehensive discovery demands through email and their frequently-used Twitter accounts," Teneo said.

The issued subpoenas are related to the ongoing bankruptcy of 3AC, which shook the crypto industry last year of its implosion.

Last year, liquidators claimed that the 3AC founders were in Indonesia and the UAE, locations where it is difficult to enforce foreign court orders. Three Arrows Capital is a Singapore-based cryptocurrency hedge fund founded in 2012 by Davis and Zhu and had a net worth of $10 billion during its glory days.

The company filed for bankruptcy in July 2022.