The assets of Three Arrows Capital have been frozen by a federal judge in New York after the firm fell out of favor.
A few months ago the fund had $10 billion in assets. Two of its co- founders are hiding from angry creditors who are trying to recover some of their losses. The British Virgin Islands court ordered the fund to liquidate in order to pay back its debts prior to the filing of the Chapter 11 case.
The Southern District of New York granted the emergency motion on Tuesday. CNBC was at a court hearing covering the next steps in the process.
Glenn stated in the decision that only the assigned bankruptcy liquidators have the authority to dispose of assets located within the United States.
Glenn granted permission for global advisory firm Teneo, which was assigned to manage the liquidation, to subpoena banks and other institutions that have done business with the firm.
Three Arrows, also known as 3AC, and its leadership team may be swindling funds ahead of the formal liquidation. There are reports of at least one other digital asset transfer of a non-fungible token held by the fund, according to a report by coindesk.
Adam Goldberg, an attorney for Teneo, said in Tuesday's hearing that the world should know that the debtor's assets are in the hands of the liquidators.
Requests for comment were not responded to by the two people. Christopher Anand Daniel, their lawyer, didn't reply to CNBC's request for comment.
Goldberg is a partner in the law firm Latham & Watkins.
Lawyers for the creditor said that the physical location of the two men are currently unknown. 3AC's offices were found to be empty, save for a few inactive computer screens, according to the creditor.
In the early hours of Tuesday, Zhu broke his silence on the social networking site, writing that the firm's attempts to cooperate with the creditor had been met with baiting.
From his verified account, he shared screen grabs of his lawyer's emails. The families of the co- founders have received threats of physical violence, according to the attorney. He said that they had to answer questions from the Monetary Authority of Singapore in the last week.
Daniel said in the email that they would be providing additional information about the firm's assets on a rolling basis.
CNBC asked Daniel for a spreadsheet but he didn't reply. Goldberg said during the hearing that the information given to his team is not enough.
The process could take years according to Nic Carter.
Carter didn't think the situation would be resolved. I would be very concerned about dispositions of assets and trying to extricate them or expropriate assets that are owed to creditor and suck those out of the process for the personal usage of the principles here.
Carter said the case is complicated because it involves entities in several locations.
Carter said the level of coordination required in order to unify the legal process was very significant.
Dan Mangan was a contributor to the report.
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