Three Arrows going after founder Zhu Su’s wife for US$40 million from Dubai property sale

[SINGAPORE] While Zhu Su, the co-founder-director of the now-in-liquidation crypto hedge fund Three Arrows Capital, was serving jail time in Singapore for non-compliance of a court order, he was said to have transferred a Dubai property to his wife.

The property, bought for 110 million dirhams (US$30 million), was allegedly paid for from a purported loan of US$50 million worth of cryptocurrency from Three Arrows Capital to Zhu.

He was said to have made the purchase three weeks before the hedge fund was placed in liquidation in June 2022 after the crash in cryptocurrencies.

Now, the firm is suing Dr Evelyn Tao Yaqiong, Zhu’s wife, for the 146 million dirhams or approximately US$40 million proceeds from the January 2024 sale of the property.

In a lawsuit filed on Apr 23, the liquidators who are supporting the firm in its claim against the 39-year-old naturalised Singaporean, pointed out that Zhu transferred title of the Dubai property to Dr Tao on or around Oct 26, 2023 while he was still in Changi Prison serving his sentence for contempt of court.

But Dr Tao – who has a PhD in biology – did not pay for the transfer of the property, the claimant alleged. The company is represented by Beacon Law’s Lionel Leo.

Zhu was arrested when he tried to leave Singapore. He started his four months’ imprisonment in September 2023 for not complying with order to disclose his dealings with the firm. The 39-year-old is also a naturalised Singapore citizen.

“It is to be inferred from the following facts that Zhu transferred the Dubai property to the defendant for the purposes of keeping the Dubai property (and the sale proceeds after it was sold) out of reach of the liquidators (and creditors) of (Three Arrows Capital),” said the statement of claim.

The liquidators noted that Zhu transferred the property to his wife only a year after purchasing it, and after he was committed to prison. Neither did he mention the property to the liquidators despite having an obligation to do so.

They do not know where Dr Tao is holding the sale proceeds or whether she has used or transferred any of the money.

They accused Zhu of prejudicing the creditors of Three Arrows Capital when he transferred the US$50 million of cryptocurrency from the firm to himself in alleged breach of fiduciary duties.

While Zhu’s lawyers said that he and Dr Tao had separated in 2022, the liquidators said there was no good reason for the gift a year after the purported separation.

Claims disputed

The claims were disputed by Dr Tao, who contended that she had not known of Zhu’s alleged breach nor the source of the funds for the Dubai property, and that she did not dishonestly assist him.

She also claimed that she believed in good faith that she owned the Dubai property as a gift and was entitled to the sales proceeds, as Zhu had earlier bought properties for her and their daughters.

She argued that Zhu had in March 2022, during their trip to Dubai, suggested buying a villa there for her as the family could relocate with Three Arrows Capital to the emirate.

Zhu had gone ahead to make down payment for the property in his own name when he visited the city after a conference, as Dr Tao was then in Singapore preparing relocation matters.

Also, she claimed that they separated in mid-2022 as their relationship soured, and entered into a formal deed of separation in January 2024.

She has applied to strike out the suit against her through Christopher Daniel of Advocatus Law.

Three Arrows Capital owes more than US$3 billion to creditors, with liquidators reportedly seeking to recover US$1.3 billion from its co-founders, as at October 2023.

It recently announced that it will be distributing the seventh interim dividend to creditors.