Authorities arrested disgraced crypto hedge fund co-founder Su Zhu Friday, the latest detainment of a star from the crypto industry’s last bull cycle, YahooFinance.com reported. Singaporean authorities apprehended Su Zhu, 36, Friday afternoon at the country’s Changi Airport while he was attempting to leave the country. Singaporean courts placed a “committal order” against him according to Teneo, the court-appointed joint liquidators in the bankruptcy for Zhu’s firm, Three Arrows Capital Ltd. The court order, placed on Sept. 25, came as a consequence of Zhu’s “deliberate failure” to cooperate with Teneo’s investigations. He was sentenced to four months' imprisonment. The Singaporean courts have granted a similar order for Three Arrows' other co-founder, Kyle Davies, though "his whereabouts remain unknown at this point in time," said a Teneo spokesman. Separately, the Monetary Authority of Singapore earlier this month prohibited Zhu and Davies from conducting regulated investment activity for nine years each, according to Teneo.
Crypto exchange Gemini Trust Co. withdrew hundreds of millions of dollars from Genesis Global Holdco LLC several months before the lender froze deposits and ultimately filed for bankruptcy, Bloomberg News reported. Genesis and Gemini offered customers in the so-called Earn program the opportunity to generate yields on their crypto tokens. The service let customers of the Tyler and Cameron Winklevoss-owned exchange lend their tokens through Genesis. In August 2022, Gemini took out about $282 million in cryptocurrency from Genesis. The funds withdrawn from Genesis were used to build out a reserve intended to ensure Gemini Earn customers could make immediate redemptions. None of the money went directly to Gemini’s billionaire founders, the Winklevoss twins. Days after the collapse of FTX sent the already beleaguered crypto market into a spiral, Genesis froze customer withdrawals. In January, it filed for chapter 11 protection in New York. Gemini has since filed a claim in the bankruptcy court seeking $1.1 billion on behalf of Earn users. In the months since the initial withdrawal freeze, Gemini, Genesis and its parent company Digital Currency Group have been locked in settlement negotiations that have included public sparring between DCG’s founder Barry Silbert and the Winklevoss twins.
Ohio victims of child sexual abuse while in the Boy Scouts of America could see more compensation for the crimes committed against them under legislation passed by the state Senate yesterday in a unanimous vote, and expected to be approved in the House, the Associated Press reported. The bill’s passage comes amid the organization’s bankruptcy settlement, first filed in 2020 after tens of thousands of men nationwide brought forth claims they had been sexually abused by their Scout leaders. The organization filed bankruptcy in an attempt to continue operating while still partially compensating victims after an onslaught of lawsuits against them. Nearly 2,000 abuse claims have been filed in Ohio. Currently, the amount victims receive from the organization’s settlement depends on the length of the statute of limitations for civil claims in the state that they live in, as well as the length and severity of their abuse. The legislation voids the state’s current civil statute of limitations in bankruptcy cases, in an effort to ensure Ohio victims of Boy Scouts abuse get more compensation. By voiding Ohio’s existing cutoff of 12 years, the bill would ensure that any victim filing a claim receives all of the money they’re owed through the settlement, rather than a fraction of it.
Failed crypto lender BlockFi Inc. won bankruptcy court approval on its plan for shutting down its business, a milestone that could result in customers getting back a portion of what they’re owed by the end of the year, Bloomberg News reported. Bankruptcy Judge Michael Kaplan said during a hearing yesterday that he would approve BlockFi’s liquidation plan which was supported by a committee representing customer interests and creditors that voted to support it. Some BlockFi creditors are slated to receive partial repayment in Bitcoin or Ethereum, according to court documents. BlockFi unsecured creditors could get between roughly 35% to 63% of what they’re owed, according to an August court filing. The amount creditors ultimately receive hinges on whether BlockFi succeeds in litigation against FTX and other bankrupt crypto firms. BlockFi has said the outcome of its disputes with Sam Bankman-Fried’s platform and failed crypto hedge fund Three Arrows Capital could swing creditor recoveries by $1 billion. The liquidation plan was approved after BlockFi settled a dispute with the creditors committee over potential legal claims against the company’s senior management. BlockFi largely blamed its failure on FTX, which melted down last year amid allegations of fraud, while the committee alleged management ignored red flags before lending to Bankman-Fried’s platform.
In U.S. prosecutors' telling, Sam Bankman-Fried embezzled money from depositors in his FTX cryptocurrency exchange ever since he launched it in 2019, and the resulting shortfall led directly to its collapse as crypto prices swooned last year, Reuters reported. But in his own version and in explanations put forth by his lawyers, Bankman-Fried thought FTX, like a bank, could make investments with customers' money as long as they were able to withdraw it — and he did not know that actions taken by his closest colleagues had jeopardized the availability of funds. Over the course of six weeks starting on Oct. 3, a federal jury in Manhattan is due to weigh these dueling narratives during Bankman-Fried's criminal trial on fraud charges, before determining whether the 31-year-old former billionaire is guilty on seven counts of fraud and conspiracy. Bankman-Fried, who quit his job as a quantitative trader at Wall Street firm Jane Street to found crypto hedge fund Alameda Research in 2017, has pleaded not guilty.
The U.S. Securities and Exchange Commission said it has concerns about Coinbase Global Inc.’s proposed involvement in Celsius Network’s plan to emerge from bankruptcy, Bloomberg News reported. Under the proposed plan, Celsius agreed to engage Coinbase to distribute assets to international customers. In a filing on Friday, the SEC — which charged Coinbase earlier this year with operating as an unregistered securities exchange, broker and clearing house — said the agreements “go far beyond the services of a distribution agent, contemplating brokerage services and master trading services that implicate many of the concerns” raised in its suit. Celsius filed for bankruptcy protection in July 2022, and is working to emerge as a new user-owned company and distribute an estimated $2 billion of Bitcoin and Ether as part of the plan. Celsius wants to start fresh under new management led by investment firm Arrington Capital, part of a consortium called Fahrenheit LLC that won the crypto lender’s assets at a bankruptcy auction earlier this year.
Burford Capital said it would be seeking court permission to begin attaching Argentine assets within weeks to satisfy a $16 billion judgment, saying it was clear that the South American nation had “no intention” of paying, Bloomberg News reported. In a letter Friday to U.S. District Judge Loretta Preska in New York, London-based Burford said it intended to ask her to set Oct. 16 as the date it can begin efforts to execute the judgment and attach assets. Preska earlier this month ordered Argentina to pay the award over its 2012 expropriation of foreign investment in oil company YPF SA. Burford, a litigation funder that acquired the claims of YPF shareholders in 2015, stands to receive the largest share of the award, or around $6.2 billion. It said on Friday that it needed to begin collection efforts right away because Argentina was not going to cooperate. The firm cited a radio interview in which an Argentine official said the country “does not have to pay” the “completely absurd” judgment. “Simply put, Argentina has no intention of paying the judgment, and it would be spurious for Argentina to suggest otherwise,” Randy Mastro, a lawyer for Burford, said in the letter, arguing that Argentina should not be given any additional time.
FTX Chief Executive and Restructuring Officer John J. Ray, whose team is overseeing a mammoth asset recovery task after the crypto exchange’s collapse, is accelerating efforts to recoup billion of dollars just weeks before FTX founder Sam Bankman-Fried heads to trial for what has been called one of the biggest financial frauds in American history, Bloomberg News reported. The week started off in bankruptcy court, where FTX sued Bankman-Fried’s parents on Monday to “recover millions of dollars in fraudulently transferred and misappropriated funds.” The lawsuit claims that Allan Joseph Bankman and Barbara Fried exploited their access and influence within FTX to “enrich themselves, directly and indirectly, by millions of dollars,” at the expense of the debtors and creditors. On Thursday, FTX Trading Ltd. sued four former employees of Salameda Ltd., a Hong Kong-incorporated affiliate of FTX, to recoup $153 million of transfers that they received just before the crypto trading platform collapsed. The former employees used their personal connections to prioritize withdrawals of their funds and digital assets from FTX once it became clear last November that the company was in trouble, according to a complaint filed in the U.S. Bankruptcy Court for the District of Delaware.
American Physician Partners, which until recently provided outsourced emergency room services to 150 U.S. hospitals, said Thursday that a ban on so-called "surprise" medical bills hastened the company's descent into bankruptcy, Reuters reported. The company's chief restructuring officer John DiDonato said at a Thursday bankruptcy court hearing in Wilmington, Delaware, that the 2020 No Surprises Act hampered the company's ability to raise revenue and recover from the long-term impacts of the COVID-19 pandemic. The law was passed to protect patients from surprise billing for care from providers outside their insurers' network. Insurers pay a much lower share of the cost of out-of-network providers than in-network providers. Before the No Surprises Act, providers typically billed patients for the balance of the cost. DiDonato on Thursday said although the law was motivated by a "sound" policy goal, it has unexpectedly worsened negotiations between healthcare providers and insurers who "unilaterally" refuse or delay payment for medical care. The private equity-backed company, which once employed 2,500 physicians, filed for chapter 11 bankruptcy on Monday after transitioning all of its medical services to new contractors and winding down operations. It has more than $570 million in debt. "The No Surprises Act had the unintended consequence of shifting the balance of power toward insurers," DiDonato told U.S. Bankruptcy Judge Brendan Shannon. "Surprise" billing had been particularly prevalent for emergency department visits, when patients would visit a hospital that was part of their insurance network but later receive a bill for out-of-network care from doctors who are not part of the same insurance network as the hospital. About 70% of emergency departments in the U.S. are outsourced, according to American Physician Partners' court filings. The company said that it did not bill patients for costs not covered by insurance. But the regulations implementing the ban have encouraged insurers to unilaterally reduce or deny payments, funneling cost disputes into a slow and ineffective "independent dispute resolution" process, according to the company's court filings.
