Bankruptcies and Inspections of Crypto Companies Continue
2022.12.07 02:17
Bankruptcies and Inspections of Crypto Companies Continue
Budrigannews.com – Subpoenas to 3AC’s former leadership, including co-founders Kyle Davies and Su Zhu, have been approved by a federal judge overseeing the bankruptcy proceedings.
The founders are compelled to hand over any “recorded information, including books, documents, records, and papers” they have in their possession that pertains to the business’s property or financial affairs by the subpoenas.
The infamous hedge fund, which was worth $10 billion at its height, filed for Chapter 15 bankruptcy on July 1 due to problems caused by excessive leverage and the collapse of Terra Luna (LUNA), now Terra Classic (LUNC), and its algorithmic stablecoin, TerraUSD (UST).
The advisory firm Teneo, the liquidators, have been attempting to locate the 3AC’s co-founders and locate the company’s assets ever since.
Any and all account information, seed phrases, and private keys for its digital and fiat assets, as well as information about securities and unregistered shares, accounts held on centralized or decentralized exchanges, and any other tangible or intangible assets, will be required of recipients by the most recent order authorizing the subpoenas.
In addition, trading desk company Tai Ping Shan Limited, venture capital firm DeFiance Capital, 3AC-backed NFT fund Starry Night Capital, and all of their associates are listed as “discovery targets” in the order, as are hedge fund attorney Hannah Terhune, directors Mark Dubois and Cheuk Yao Pau, and Kelly Chen, the wife of co-founder Kyle Davies.
Unless otherwise agreed upon by the parties, any individuals served with the subpoena must comply within 14 days.
There is a rumor that Zhu is currently residing in Dubai, while Davies is currently residing on the Indonesian island of Bali. However, there is currently no solid information regarding the whereabouts of either Davies or Zhu. Both have been vocal on social media, offering their perspectives on the events surrounding the collapse of Alameda research and FTX.
In the meantime, self-described Terra whistleblower FatMan has made new claims on Twitter that the May de-peg of TerraUSD (UST), now TerraClassicUSD (USTC), was caused by actions taken by Terraform Labs themselves rather than a coordinated attack.
Having said that, not everyone accepts the theory or the new information.
FatMan explained in a Dec. 6 Twitter thread that an anonymous researcher named Cycle_22 had provided “bombshell data” claiming that two trading wallets owned by Terraform Labs had “dumped” $450 million worth of UST on the open market in the three weeks leading up to the de-peg:
“TFL has been perpetrating the narrative that UST was ‘attacked.’ This is a false flag.”
“In actuality, TFL themselves contributed to the decline of the Curve pool by recklessly dumping a significant amount of UST in a short period of time. “FatMan stated that this greatly weakened the peg and reduced liquidity.”
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
TFL was withdrawing UST from a Curve liquidity pool (3Pool) in preparation to seed its new stablecoin liquidity pool (4Pool), on which it was working with Frax Finance at the time, according to some Twitter users who responded to the thread.
RyanLion, a Twitter user, stated that it had been “clearly communicated” that the UST swaps into the curve pool were part of moves to purchase Bitcoin (BTC) for the Luna Foundation Guard reserves by swapping UST into other stables.
A June blog from blockchain firm Chainalysis expressed that while Terraform Labs pulled out large number of UST from 3Pool at that point (roughly 150 million), it was the activities of two brokers soon after — trading a sum of 185 million UST for USDC and TFL’s reaction to that, which prompted the depeg and coming about alarm auction.
