Su Zhu and Kyle Davis, the runaway co-founders of Three Arrows Capital (3AC), came to share their version of the 3AC collapse story. However, they insisted on the innocence of rumors of an escape with investor funds.
In an exclusive interview with bloombergthe duo cited high leverage staking, the fall of the Terra ecosystem, and their Grayscale Bitcoin Trust (GBTC) holdings as catalysts for the hedge fund’s collapse.
The founders admitted to making risky bets on leveraged investments that collapsed after the heat wave. crypto winter. Their overconfidence led the fund to take a position in the market that did not live up to expectations.
“We believed in everything to the fullest, we had all of ours, almost all of our assets there. And then, in good times, we did our best. And then, in bad times, we lost the most.”
“The whole situation is unfortunate, many people have lost a lot of money.”
With the fall of the moon, 3AC collapsed.
colossal Terra collapse was a deal breaker for 3AC. Not only did they lose their massive LUNA positions, but the resulting credit crunch in the cryptocurrency market sent the hedge fund even further into a death spiral.
3AC was a big player in the Staked Ethereum (stETH) that have been affected by leveraged hunting. As prices in the crypto market fell due to the collapse of the Terra ecosystem, many traders took the opportunity to go long stETH, which caused its price to drop below that of ETH.
In order to maintain its deals, 3AC continued to borrow from major digital asset lenders and investors until things got out of hand, 3AC exploded and other firms such as Voyager Digital, Celsius were affected by the contagion as they all declared bankruptcy.
Reflecting on what had happened, Zhu said:
“What we didn’t realize is that Luna could drop to zero in a matter of days and that this would be a catalyst for an industry credit crunch that would put significant pressure on all of our illiquid positions.”
How are 3AC creditors holding up?
Like 3AC collapsed, hedge fund moved from managing over $10 billion in assets to lenders $3.5 billion among 32 companies.
Affected creditors have filed to secure the assets of the hedge fund in Singapore, which, if provided, would allow them to recover some of their funds from liquidation proceeds.
Zhu and Davis said they are working with the relevant authorities to help creditors through the collection process.
3AC founders go to Dubai
Following earlier reports To move 3AC’s headquarters from Singapore to Dubai, the distressed founders seek safety in the Emirates.
With Dubai positioning itself as a global crypto hub, Zhu and Davis believe they can get their lives in order by moving to Dubai. The move is to stay away from death threats from resentful investors.
“For Kyle and me, there are so many crazy people in crypto who make death threats or make such a fuss,” Zhu said. “We believe it is in everyone’s interest that we can be physically protected and maintain a low profile.”
Credit : cryptoslate.com