Three Arrows Capital founders miss the mark in first interview since firm's collapse

Quick Take

  • Su Zhu and Kyle Davies spoke with Bloomberg about the collapse of their hedge fund.
  • Some took offense to the interview, suggesting the founders showed a lack of humility. 

In the same week court documents showed that collapsed hedge fund Three Arrows Capital (3AC) owed creditors more than $3.5 billion, an interview given by its founders has sparked outrage among crypto executives. 

3AC's founders spoke with Bloomberg in an interview published July 22 — the first time they have broken a radio silence that began with their liquidity troubles in mid-June.  The fund filed for Chapter 15 bankruptcy in New York on July 1. 

One disgruntled party, who was granted anonymity due to the sensitivity of the bankruptcy proceedings, told The Block they were "absolutely disgusted" after reading the interview. "Stop hiding and deflecting blame and own up to your mistakes. Cooperate fully with relevant parties and do not ghost those involved with this," they added. 

3AC's CEO Su Zhu stressed in his comments that it was not true that he and co-founder Davies had absconded with funds, but rather that he had put more of his own money back into the business. “People may call us stupid. They may call us stupid or delusional. And I’ll accept that. Maybe,” Zhu told Bloomberg.  

At the same time, the pair stressed that they weren’t outliers, pointing out that many companies had been negatively affected by holding positions in similar assets. The collapse of the Terra ecosystem in May left 3AC and other companies facing significant losses.

Since the collapse of Terra, many crypto lending platforms have faced liquidity issues — including Voyager, Vauld and Celsius. Many of these issues were then exacerbated by 3AC's travails, as the fund had borrowed billions from various creditors, including $2.4 billion from Genesis and $650 million from Voyager.

Read the room  

The Block spoke with two parties working closely with 3AC creditors, both of whom appeared vexed by the interview.  

“What do you expect? They lived in a reality-distorted field for so long and treated all their lenders like paid help. There was never a partnership or real relationship, which was strange given the scale of what we were doing with them," one person told The Block. 

Crypto Twitter had a similar reaction, with many commenting on the pair's lack of humility.  

Arthur Hayes, co-founder of BitMEX — who is no stranger to controversy himself — was scornful in a thread on Twitter, taking issue with Zhu’s claim that he wasn’t flashy.  

“Common y'all. Su ain't flashy, he rides his bike to work and to the marina where his superyacht is moored. ONLY 2 homes, brah you straight slumming it in the Kampong aka Tanglin,” he wrote, referring to different Singapore neighborhoods.

A spokesperson for BitMEX confirmed to The Block in June that the exchange had liquidated 3AC's positions. They didn’t comment on the amount owed at the time, but said its legal department was in touch with 3AC. 

Galaxy Digital CEO Mike Novogratz – who admitted that "venture investing requires humility" following Terra's collapse – applauded Hayes' thread, going on to say that he didn't even know where to begin with the interview.

Ryan Sean Adams, founder of Mythos Capital and Bankless, broke down the interview in a thread, stating: “Here's how 3AC went bust: Too much leverage, believing their own hype, buying the top on speculative assets, not being ready for a 90% drawdown, investing more than they could afford to lose.” 

3AC was contacted for comment but didn't respond by press time. 

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