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Founders of bankrupt crypto hedge fund 3AC go missing

66 points by woofyman 4y ago

chenster 4y ago
WTFFFF
- nytesky 4y ago
  So maybe we are working towards a trilogy? https://www.entrepreneur.com/article/423721 https://www.entrepreneur.com/article/423721
trdtaylor1 4y ago
Seems the old adage of 'if you owe someone x dollars, it's your problem. If you owe someone xxx dollars, it's their problem' applies.
- rchaud 4y ago
  If they've absconded, that tells me that they owe money to people that are looking to show them that it's in fact not just their problem.
phabricator 4y ago
Failed hedge funds aren't new. Can someone with more knowledge explain why liquidating this one is so much more difficult than traditional ones? What's the next step here, SEC lawsuits?
- fny 4y ago
  It's crypto. It's not like the assets are sitting in traditional accounts that can be force liquidated by court order. SEC? Lol. If these guys have run off (reading the article it doesn't seem like it), the lenders are screwed. A fraction of $10 billion can buy you a lot of protection especially in crypto safe havens like El Salvador--most of which happen to be hotspots for organized crime.
  - woofyman 4y ago
    //It's not like the assets are sitting in traditional accounts that can be force liquidated by court order. Yes they can unless they want to go to jail.
    - fny 4y ago
      Or if they've run off (not saying they have). With a traditional account, a court could force the bank to transfer assets. Unless there is a third-party custodian of the accounts, there is no recourse. Not your keys, not your coins after all.
  - Animats 4y ago
    Are there "Wanted, Dead or Alive" smart contracts yet?
- jonathan-adly 4y ago
  traditional hedgefund money is in a bank - a court can freeze their account, give it to their creditors, seize any new money that goes in it, etc. Crypto hedge-funds money is a cold-wallet protected by a 12 words phrase (some anyway - if they are smart). No one can really get to them. (yes - the founder can go to jail. But, funds could stay locked forever)
  - phabricator 4y ago
    > Crypto hedge-funds money is a cold-wallet Is this the case here, specifically? (I assume so, just curious)
  - woofyman 4y ago
    Given a choice between life in jail or turning over the coins, I know what I would do.
- thesausageking 4y ago
  Crypto or not, when a large, heavily leveraged hedge fund implodes, it's really complex to unwind. It was the same when Bill Hwang's Archegos Capital failed last year: https://en.wikipedia.org/wiki/Archegos_Capital_Management https://en.wikipedia.org/wiki/Archegos_Capital_Management The day they got wiped out, the liquidations caused a 27% drop in share price of ViacomCBS. The various lawsuits and charges of fraud and racketeering will take years to work their way through to completion.
  - phabricator 4y ago
    Are there other crypto funds that are structured to handle a failure better? I know it's crypto but it's shocking to see people invest in a suitcase stuffed with dollar bills.
    - rich_sasha 4y ago
      "custodianship", as it is known, does begin to exist in crypto world. The custodian / administrator / prime broker (all related terms) hold the actual keys, and you have something like a limited key that permits some pre-agreed operations. So for example you can only wire funds to pre-approved addresses.
    - randomran01234 4y ago
      DeFi is holding up just fine.
- rich_sasha 4y ago
  Hedge funds usually have an administrator who holds the money. This is a big, reputable organisation, usually tied to a bank and heavily regulated. it permits the fund to trade within a narrow mandate agreed with fund investors. If the HF managers disappear, the assets, perhaps with heavy losses, remain with the administrator. The administrator answers first and foremost to fund investors. The article suggests, and it's not uncommon with crypto hedge funds, that funds were held in private wallets. So if Su Zhu disappears one day with his Ledger, that's that. Having external administrators for classic HFs wasn't the norm until Bernie Madoff (who didn't have an administrator), funny that.
hiq 4y ago
https://twitter.com/zhusu/status/1546801270014758912 https://twitter.com/zhusu/status/1546801270014758912
Snackchez 4y ago
I’m not sure if they’re missing. Zhu Su reinstated his Twitter account and tweeted 6 hours ago https://twitter.com/zhusu/status/1546801270014758912?s=21&t=AoeGtRUcvYs43U0SEzGiYA https://twitter.com/zhusu/status/1546801270014758912?s=21&t=...
- strangattractor 4y ago
  Someone tweeting is not the same as knowing where they are physically located so they can be server legal papers or taken to jail.
  - Canada 4y ago
    They are not, to my knowledge, being sought for arrest at this time, I don't see any reason why they have to make their physical locations known. Their lawyers are clearly available to be served documents.
deleted 4y ago
[deleted]
LatteLazy 4y ago
This is why fund administrators and custodians are things...
- phabricator 4y ago
  Crypto admin and custodian services exist though. If the allegations are true it sounds like scammy people just ran a scam, and crypto made it easier.

66 points by woofyman 4y ago

chenster 4y ago

WTFFFF

nytesky 4y ago
So maybe we are working towards a trilogy? https://www.entrepreneur.com/article/423721 https://www.entrepreneur.com/article/423721

trdtaylor1 4y ago

Seems the old adage of 'if you owe someone x dollars, it's your problem. If you owe someone xxx dollars, it's their problem' applies.

rchaud 4y ago
If they've absconded, that tells me that they owe money to people that are looking to show them that it's in fact not just their problem.

phabricator 4y ago

Failed hedge funds aren't new. Can someone with more knowledge explain why liquidating this one is so much more difficult than traditional ones? What's the next step here, SEC lawsuits?

fny 4y ago
It's crypto. It's not like the assets are sitting in traditional accounts that can be force liquidated by court order. SEC? Lol. If these guys have run off (reading the article it doesn't seem like it), the lenders are screwed. A fraction of $10 billion can buy you a lot of protection especially in crypto safe havens like El Salvador--most of which happen to be hotspots for organized crime.
- woofyman 4y ago
  //It's not like the assets are sitting in traditional accounts that can be force liquidated by court order. Yes they can unless they want to go to jail.
  - fny 4y ago
    Or if they've run off (not saying they have). With a traditional account, a court could force the bank to transfer assets. Unless there is a third-party custodian of the accounts, there is no recourse. Not your keys, not your coins after all.
- Animats 4y ago
  Are there "Wanted, Dead or Alive" smart contracts yet?
jonathan-adly 4y ago
traditional hedgefund money is in a bank - a court can freeze their account, give it to their creditors, seize any new money that goes in it, etc. Crypto hedge-funds money is a cold-wallet protected by a 12 words phrase (some anyway - if they are smart). No one can really get to them. (yes - the founder can go to jail. But, funds could stay locked forever)
- phabricator 4y ago
  > Crypto hedge-funds money is a cold-wallet Is this the case here, specifically? (I assume so, just curious)
- woofyman 4y ago
  Given a choice between life in jail or turning over the coins, I know what I would do.
thesausageking 4y ago
Crypto or not, when a large, heavily leveraged hedge fund implodes, it's really complex to unwind. It was the same when Bill Hwang's Archegos Capital failed last year: https://en.wikipedia.org/wiki/Archegos_Capital_Management https://en.wikipedia.org/wiki/Archegos_Capital_Management The day they got wiped out, the liquidations caused a 27% drop in share price of ViacomCBS. The various lawsuits and charges of fraud and racketeering will take years to work their way through to completion.
- phabricator 4y ago
  Are there other crypto funds that are structured to handle a failure better? I know it's crypto but it's shocking to see people invest in a suitcase stuffed with dollar bills.
  - rich_sasha 4y ago
    "custodianship", as it is known, does begin to exist in crypto world. The custodian / administrator / prime broker (all related terms) hold the actual keys, and you have something like a limited key that permits some pre-agreed operations. So for example you can only wire funds to pre-approved addresses.
  - randomran01234 4y ago
    DeFi is holding up just fine.
rich_sasha 4y ago
Hedge funds usually have an administrator who holds the money. This is a big, reputable organisation, usually tied to a bank and heavily regulated. it permits the fund to trade within a narrow mandate agreed with fund investors. If the HF managers disappear, the assets, perhaps with heavy losses, remain with the administrator. The administrator answers first and foremost to fund investors. The article suggests, and it's not uncommon with crypto hedge funds, that funds were held in private wallets. So if Su Zhu disappears one day with his Ledger, that's that. Having external administrators for classic HFs wasn't the norm until Bernie Madoff (who didn't have an administrator), funny that.

hiq 4y ago

https://twitter.com/zhusu/status/1546801270014758912 https://twitter.com/zhusu/status/1546801270014758912

Snackchez 4y ago

I’m not sure if they’re missing. Zhu Su reinstated his Twitter account and tweeted 6 hours ago https://twitter.com/zhusu/status/1546801270014758912?s=21&t=AoeGtRUcvYs43U0SEzGiYA https://twitter.com/zhusu/status/1546801270014758912?s=21&t=...

strangattractor 4y ago
Someone tweeting is not the same as knowing where they are physically located so they can be server legal papers or taken to jail.
- Canada 4y ago
  They are not, to my knowledge, being sought for arrest at this time, I don't see any reason why they have to make their physical locations known. Their lawyers are clearly available to be served documents.

deleted 4y ago

[deleted]

LatteLazy 4y ago

This is why fund administrators and custodians are things...

phabricator 4y ago
Crypto admin and custodian services exist though. If the allegations are true it sounds like scammy people just ran a scam, and crypto made it easier.