Two of the founding members of Three Arrows Capital (3AC), who have been missing for the past five weeks, have talked out about the shocking demise of their once-promising cryptocurrency hedge firm.
According to a Bloomberg story on July 22, Su Zhu and Kyle Davies contend that their unsuccessful cryptocurrency speculation led to spiraling margin calls on mortgages which should never have been made in the first place.
Before its collapse, the two 35-year-olds had transformed 3AC into a market leader in cryptocurrency trading, rendering creditors insolvent and hastening a selloff that prompted holders of Bitcoin and other tokens to incur large losses.
3AC Founders Blame Overconfidence For Collapse
They acknowledged that the collapse had resulted in significant pain, but they largely shied away from questions on how it had affected individuals employed in related fields. Instead, they underlined the large losses they had suffered and refuted claims that they had removed funds from 3AC prior to everything going wrong. According to documents submitted on July 8 by the consultants in charge of liquidating the fund, Zhu and Davies were uncooperative and the whereabouts of the company’s founders were unknown.
They had to go into hiding, according to Zhu, since they had received death threats. The two people remained silent when asked where they were at the time. Nonetheless, one of the lawyers who took part in the discussion hypothesized that their next stop would be the United Arab Emirates, which has recently developed into a hotspot for bitcoin activities. They describe a confluence of interrelated one-way bets and accommodating funding arrangements that all collapsed simultaneously, leading to the bankruptcy of their fund as well as the insolvency, distress, and bailouts of businesses including Celsius Network, Voyager Digital, and BlockFi.
Creditors said last week that the fund’s founders put a down payment on a boat worth $50 million prior to the fund’s failure. According to Zhu, these allegations are a part of a plot to damage the company’s reputation.