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3AC subpoenas as Terraform dump controversy intensifies

Three Arrows Capital:

The bankruptcy judge has approved subpoenas to the executives of Three Arrows Capital, and a new Terra Luna conspiracy has been suggested.

An order was ordering the delivery of subpoenas to Three Arrows Capital’s former leadership, including co-founders Su Zhu and Kyle Davies, was signed by the federal judge handling the bankruptcy proceedings for 3AC.

The subpoenas demand that the founders turn up “recorded material, including books, documents, records, and papers” that pertain to the firm’s assets or financial affairs and are in their possession.

When Terra Luna (LUNA), now known as Terra Classic (LUNC), and its algorithmic stablecoin formerly known as TerraUSD collapsed, the notorious hedge fund—worth $10 billion at its peak—filed for Chapter 15 bankruptcy on July 1. (UST).

Since then, the firm’s liquidators, consultancy firm Teneo, have been looking for the company’s assets and seeking to identify the co-founders of 3AC.

According to the most recent order authorizing the subpoenas, the recipients will be required to turn over all account information, seed phrases, and private keys for their digital and fiat assets, information regarding their securities and unregistered shares, any accounts held on centralized or decentralised exchanges, along with any other tangible or intangible assets.

Trading desk company:

The order also names trading desk company Tai Ping Shan Limited, venture capital firm DeFiance Capital, NFT fund Starry Night Capital, 3AC-backed NFT fund Starry Night Capital, directors Mark Dubois and Cheuk Yao Pau, and Kelly Chen, the wife of co-founder Kyle Davies, as “discovery targets,” along with all of their associates.

Unless otherwise agreed with the parties, anyone served with a subpoena must comply within 14 days.

As of this writing, neither Zhu nor Davies’ whereabouts have been confirmed; however, it is believed that Zhu resides in Dubai and Davies lives on the Indonesian island of Bali. They both frequently post updates on social media on the developments surrounding the demise of FTX and Alameda research.

Claim: Before the crash, Terraform dumped $450 million in UST.

In the meantime, self-described Terra whistleblower FatMan has made fresh claims on Twitter, claiming that rather than a coordinated attack, Terraform Labs’ actions were what caused TerraUSD (UST), now TerraClassicUSD (USTC), to be de-pegged in May.

Nevertheless, only some people are persuaded by the idea that knowledge is fresh.

In a post on Twitter on December 6, FatMan highlighted “bombshell evidence” that purportedly revealed two trading wallets that are confirmed to be controlled by Terraform Labs had “dumped” $450 million in UST in the three weeks before to the de-peg, explaining:

The story that UST was “attacked” has been spread by TFL. This is an elaborate hoax.

In truth, TFL damaged the Curve pool by carefully dumping a large volume of UST in a short period. This decreased liquidity and significantly weakened the peg, according to FatMan.

The fact that TFL was removing UST from a Curve liquidity pool (3Pool) to seed a new stablecoin liquidity pool (4Pool), on which it was collaborating with Frax Finance at the time, was “public knowledge,” according to some Twitter users responding to the discussion.

Others, like Twitter user RyanLion, asserted that it had been “clearly disclosed” that the UST swaps into the curve pool were a component of actions to swap UST into other stables to buy Bitcoin (BTC) for the Luna Foundation Guard reserves.


According to a blog post from the blockchain company Chainalysis in June, although Terraform Labs had taken out roughly 150 million UST from 3Pool at the time, it was the actions of two traders an hour later — who exchanged a total of 185 million UST for USDC — and TFL’s reaction to those trades that caused the depeg and subsequent panic sell-off.

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