(Bloomberg) -- Insolvency professionals overseeing the cleanup of defunct crypto hedge fund Three Arrows Capital said they have taken control of more than $35 million of hard currencies, seized more than 60 types of digital tokens and even sought $30 million from the sale of a superyacht named “Much Wow” as part of their recovery efforts. 

But the lack of cooperation from fund founders Su Zhu and Kyle Davies is complicating the liquidation, which is designed to repay creditors owed more than $3 billion as much as possible. Advisers for Three Arrows have still had only two live conversations -- via video conference -- with the founders, who are believed to be in either Bali or the United Arab Emirates, according to a presentation delivered in bankruptcy court Friday.

“We have had to effectively recreate the company and the records of the company from scratch” because Zhu and Davies aren’t cooperating, said Russell Crumpler, a liquidator for Three Arrows in the British Virgin Islands.

Three Arrows collapsed earlier this year after a series of mistimed bets and soured crypto prices left the fund, known for making trades turbocharged by leverage, facing margin calls. It previously managed around $4 billion in assets. The implosion was one of several blowups in the spring that rocked the industry, which is absorbing a new shock following the sudden undoing last month of Sam Bankman-Fried’s FTX empire.   

Little Help

Zhu and Davies’ lack of engagement is making even the simplest legal processes difficult. Because their precise whereabouts are unknown, lawyers are trying to subpoena the duo via Twitter. But on Friday, US Bankruptcy Judge Martin Glenn voiced concern about the effectiveness of such an order because Zhu and Davies’ citizenship is unclear. 

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A lawyer for Three Arrows railed against the founders in the hearing Friday, saying the pair are not upholding their duty to help creditors get repaid. He also said the duo hired security experts in the run-up to the hedge fund’s collapse to establish a secure way to communicate that could be deleted. 

“The founders’ behavior shows they have something to hide,” Adam Goldberg, a Latham & Watkins lawyer representing Three Arrows in the US, said in the hearing. Zhu and Davies have left liquidators with “no choice” but to subpoena them for information, he said. 

Zhu, reached by phone, refuted the liquidators, claiming he and Davies “have been cooperating throughout,” and that they provided “legal Saft documents for private investments as well as contract details, a full asset list of the fund, contacts of all service providers who have info, ongoing adhoc support.” Saft refers to a contract that gives its owner the right to a certain number of coins to be issued in the future. 

Davies said on Twitter that “unfortunately our liquidators seem to refuse to engage us constructively. After months, cash in a bank account, minimal asset sales, there have still been no disbursements to creditors. Let us speak openly with all creditors to find a better way forward.”

Representatives at a law firm for Zhu and Davies based in Singapore didn’t respond to a request for comment. 

Much Wow

Advisers have uncovered evidence of money flowing directly from Three Arrows to pay for Much Wow, a luxury superyacht, according to the hedge fund’s liquidators. The firm building the boat ultimately canceled the purchase contract because final amounts owed weren’t paid, and the ship has since been resold. 

The entity formed to own the vessel, Much Wow Ltd., is now in insolvency proceedings in the Cayman Islands. Proceeds from the sale of the boat will ultimately be funneled to Much Wow, and Three Arrows liquidators have filed a $30 million claim in the case. 

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The liquidators’ Friday presentation also featured screenshots of recent tweets made by Zhu and Davies that criticized Bankman-Fried and FTX, which was displayed as evidence of their willingness to speak publicly. The presentation also noted founders’ tweets that pushed for the truth of FTX’s situation to emerge.

--With assistance from Olga Kharif and Joanna Ossinger.

(Adds comment from Davies in ninth paragraph.)

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