Founders of bankrupt crypto hedge fund 3AC go missing (opens in new tab)

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.

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

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.

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)

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.

Someone tweeting is not the same as knowing where they are physically located so they can be server legal papers or taken to jail.

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.

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.

So maybe we are working towards a trilogy?

https://www.entrepreneur.com/article/423721