Three Arrows founders break silence after weeks on the run due to death threats
Two of the founders of Three Arrows Capital (3AC), who had been in hiding for five weeks, have spoken of the stunning collapse of their once-promising crypto hedge fund.
Su Zhu and Kyle Davies, claim their botched crypto speculation sparked cascading margin calls on loans that should never have been issued in the first place, according to a Bloomberg report July 22.
The two 35-year-olds had turned 3AC into a crypto trading giant before it collapsed, bankrupting creditors and accelerating a sell-off that forced investors in Bitcoin and other tokens to suffer significant losses.
They admitted that the collapse had caused considerable suffering, but for the most part avoided inquiring about the impact it had on those working in related industries. Instead, they pointed to the significant losses they suffered as they disputed accusations that they withdrew money from 3AC before it all went wrong.
“People can call us stupid. They can call us stupid or delusional. And, I will accept that. Maybe. But they’ll, you know, say that I’ve leaked funds in the last period, where I’ve actually handed over more of my personal money. It’s not true.
Zhu claims they are communicating with the authorities
In documents filed July 8, advisers in charge of the fund’s liquidation said Zhu and Davies had not cooperated with them and the location of the company’s founders was unknown. Zhu said they were forced into hiding because they received death threats.
Zhu added in a phone conversation with Davies and two attorneys from Solitaire LLP, “That doesn’t mean we haven’t contacted all of the relevant authorities. We have been communicating with them since day one.
“The whole situation is regrettable. A lot of people lost a lot of money,” Davies added.
3AC founders refuse to reveal their whereabouts
Both individuals declined to reveal their current location. Yet one of the lawyers who participated in the conversation speculated that their ultimate destination was the United Arab Emirates, which has recently become a hub of cryptocurrency activity.
They detail a convergence of interconnected one-way bets and accommodating funding arrangements that all exploded at the same time, leading not only to the failure of their fund, but also the insolvency, distress and bailout of companies such as as Celsius Network, Voyager Digital and BlockFi.
This week, creditors accused the fund’s founders of making a down payment on a yacht worth $50 million before the fund went bankrupt. Zhu said the allegations were part of a plot to tarnish the company’s reputation.
According to Zhu, the boat “was purchased over a year ago and ordered to be built and used in Europe,” Zhu said, adding that the yacht “has a runway full of money.” He also refuted the idea that he led a lavish life by pointing out that he cycled to and from work every day and that his family “only has two houses in Singapore”.
Finally, in response to questions about what was wrong with the company, Zhu noted the overconfidence born of a multi-year bull market that permeated not just him and Davies, but virtually the entire infrastructure of industry credit, where crypto lenders have seen their values rise as a result of funding companies such as theirs.