Three Arrows founders fail in appeal for orders to disclose crypto fund dealings to be set aside

Singapore Law Watch

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Three Arrows founders fail in appeal for orders to disclose crypto fund dealings to be set aside
Source: Business Times
Article Date: 25 Jun 2025
Author: Tessa Oh
But Court of Appeal overturns lower court decision that allows liquidators to examine co-founder Zhu Su.
The Court of Appeal on Tuesday (Jun 24) dismissed an application by the founders of Three Arrows Capital (3AC) to set aside orders requiring them to disclose their dealings with their now-defunct cryptocurrency fund.
Chief Justice Sundaresh Menon, however, overturned a lower court decision that allowed liquidators to examine its co-founder Zhu Su following the collapse of 3AC in 2022.
In October 2022, 3AC and its two founders, Zhu and Kyle Davies, were ordered by the court to disclose their dealings with the hedge fund – including any relevant books, papers, or records – to liquidators.
However, both Zhu and Davies failed to comply with the disclosure order, prompting the liquidators to file two orders initiating contempt of court proceedings against them. Both men were subsequently sentenced to four months' jail for the offence.
In 2023, Zhu and Davies applied to the court to have all three orders set aside, which was dismissed. They took their appeal against that decision to the Court of Appeal, in a hearing in April.
Separately, following Zhu's arrest on Sep 29, 2023, liquidators sought an examination order from the court, believing that his incarceration will give them an opportunity to obtain more information about the affairs of the cryptocurrency fund.
Following this, the liquidators commenced proceedings against Zhu and Davies in the British Virgin Islands, in which they sought to recover US$66 million which Zhu allegedly owed to the hedge fund.
Zhu then applied for the examination order, as well as further orders for him to provide additional answers and appear for further examination, to be set aside. This application was also dismissed.
'Deliberate decision' to evade liquidators
In his judgement, the chief justice ruled that the lower court had correctly dismissed the founders' applications to set aside the disclosure order, as well as the two orders relating to the contempt of court proceedings.
In the April hearing, Zhu and Davies' lawyers were under the impression that they were cooperating with the liquidators' requests for information and did not think that committal orders would be sought against them.
But this is 'no answer at all', said Chief Justice Menon, who noted that the founders were aware of the disclosure order by Jan 5, 2023, but had no explanation as to why they waited 10 months before filing to have the orders set aside. Their applications were also made well after the 14-day deadline prescribed in the Rules of Court 2021.
Furthermore, Zhu and Davies' argument that they thought they had been cooperating with liquidators in good faith 'said nothing about whether the setting-aside applications had been brought within time, or whether there were grounds for extending time', he added.
'We are with the inference the judge drew, which is that (Zhu and Davies) deliberately chose not to take any steps to set aside the disclosure order because they thought they could remain out of reach of its enforcement.
'In such circumstances, we see no good reason why (Zhu and Davies) should be allowed to revisit the question 10 months later of whether the disclosure order should even have been made against them in the first place.'
'A delay of this time is patently unreasonable,' he added. 'Therefore, we hold that (the founders) were out of time to bring the setting-aside applications against the disclosure order.'
The chief justice also noted that Zhu and Davies, being the only directors of 3AC, chose to discharge the company's lawyers a few days before the hearing for the disclosure order was to be heard.
'(This) suggested a deliberate decision by (Zhu and Davies) to evade the efforts of the liquidators to gather the necessary information pertaining to the company,' he wrote.
As for the application relating to the examination order, Chief Justice Menon said the order is not an appropriate means for the liquidators to obtain information from the founders. This is given that the liquidators already intended to commence proceedings to sue Zhu and Davies in the British Virgin Islands shortly before making the order.
Since the liquidators had already decided they wanted to sue the founders, they should be subject to the constraints imposed by the rules of civil procedure, he added.
The court set aside the examination order, but made orders to resolve the outstanding issues arising from the lower court's earlier decision to grant it.
Source: The Business Times © SPH Media Limited. Permission required for reproduction.
Zhu Su v Three Arrows Capital Ltd and others and other appeals [2025] SGCA 31
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