3AC subpoenas issued as dispute grows over claims of Terraform dump

A national justice overseeing Three Arrows Capital’s (3AC’s) bankruptcy proceedings has signed an bid approving subpoenas to beryllium delivered to 3AC’s erstwhile leadership, including co-founders Su Zhu and Kyle Davies.

The subpoenas necessitate the founders to springiness up immoderate “recorded information, including books, documents, records, and papers” successful their custody that relates to the firm’s spot oregon fiscal affairs.

The infamous hedge fund, worthy $10 cardinal astatine its peak, filed for Chapter 15 bankruptcy connected Jul. 1 with its troubles tied up successful excessively overmuch leverage and the illness of Terra Luna (LUNA), known present arsenic Terra Classic (LUNC), and its algorithmic stablecoin formerly known arsenic TerraUSD (UST).

Since then, the liquidators — advisory steadfast Teneo — person been trying to hunt down the firm’s assets and pin down the 3AC's co-founders.

The latest bid allowing for the subpoenas volition necessitate recipients to springiness up immoderate and each relationship information, effect phrases, and backstage keys for its integer and fiat assets, details astir the securities and unregistered shares, and immoderate accounts held connected centralized oregon decentralized exchanges, on with immoderate different tangible oregon intangible assets.

The bid besides labels hedge money lawyer Hannah Terhune, directors Mark Dubois and Cheuk Yao Pau, and Kelly Chen — woman of co-founder Kyle Davies — arsenic “discovery targets”, alongside trading table institution Tai Ping Shan Limited, task superior steadfast DeFiance Capital, 3AC-backed NFT money Starry Night Capital and each of their associates.

Related: Legal squad for 3AC liquidators blast founders for shifting blasted to FTX, media blitz amid bankruptcy

Any individuals served with the subpoena are required to comply wrong 14 days unless different agreed with the parties.

At the clip of penning determination has been nary coagulated accusation connected the whereabouts of either Zhu oregon Davies, it’s rumored Zhu is residing successful Dubai portion Davies is residing connected the Indonesian land of Bali. Both person been progressive connected societal media commenting connected developments relating to the illness of FTX and Alameda research.

Claim: Terraform dumped $450M UST earlier crash

Meanwhile, self-proclaimed Terra whistleblower FatMan has made caller claims connected Twitter that it was the actions of Terraform Labs itself that led to the de-pegging of TerraUSD (UST), present TerraClassicUSD (USTC), successful May — arsenic opposed to a concerted attack.

That being said, not everyone is convinced astir the mentation oregon that the accusation is new.

In a Dec. 6 Twitter thread FatMan cited “bombshell data” from anonymous researcher Cycle_22 that purportedly discovered 2 trading wallets which are verified to beryllium owned by Terraform Labs had “dumped” $450 cardinal worthy of UST connected the unfastened marketplace successful the 3 weeks starring up to the de-peg, explaining:

“In reality, TFL themselves weakened the Curve excavation by irresponsibly dumping a monolithic magnitude of UST successful a abbreviated timeframe. This reduced liquidity and severely weakened the peg," FatMan said.

December 6, 2022: New on-chain information indicates TFL sold $450m successful UST successful the weeks starring up to the UST collapse, greatly exacerbating if not straight causing its demise. https://t.co/ijPMo0XqVt

However, immoderate Twitter users responding to the thread person stated it was “public knowledge” that TFL was withdrawing UST from a Curve liquidity excavation (3Pool) successful mentation to effect its caller stablecoin liquidity excavation (4Pool) it was moving with Frax Finance astatine the time.

Others, specified arsenic Twitter idiosyncratic RyanLion said it had been “clearly communicated” that the UST swaps into the curve excavation were portion of moves of swapping UST into different stables to acquisition Bitcoin (BTC) for the Luna Foundation Guard reserves.

A June blog from blockchain steadfast Chainalysis said that portion Terraform Labs withdrew millions of UST from 3Pool astatine the clip (approximately 150 million), it was the actions of 2 traders successful the hr pursuing — swapping a full of 185 cardinal UST for USDC and TFL’s effect to that, which led to the depeg and resulting panic sell-off.