Crypto hedge fund Three Arrows Capital has made headlines recently, as it filed for bankruptcy because of the crisis in the crypto industry. The two founders of the embattled company gave an interview to Bloomberg recently about how the fund had come apart from the seams. Kylie Davies and Su Zhu did not share their location, but a lawyer monitoring the duo said that they are currently in the United Arab Emirates (UAE).
According to Zhu, he would be ready to accept being called ‘stupid’ by people, but he said that allegations of him absconding with funds from the company are false.
The last couple of weeks have seen 3AC’s dilemma take center stage in the crypto industry since reports in mid-June had said that the fund was insolvent. Zhu had tweeted on June 15th that they were communicating with all relevant parties and would work things out. But, this was a cryptic statement, as no one knew what he meant.
Further reports indicate that a number of exchanges had liquidated the leveraged positions of the crypto fund. It had also been reported that 3AC owed a whopping $655 million to Voyager Digital. Days later, a court in the British Virgin Islands had ordered the fund to liquidate its assets. In the first week of July, the company finally filed for Chapter 15 bankruptcy for protecting the assets it owns in the US.
During all this chaos, the company’s two founders had been silent and no one had any idea about their whereabouts. This week, the two decided to do an interview and share their side of the story. The co-founders admitted that 3AC’s decline had spread like a contagion throughout the crypto industry, as other companies also filed for bankruptcy soon after.
However, they denied allegations of absconding funds from the company before its collapse. According to Zhu, the executives of the company had to face significant personal losses in trying to save it. He said that people could call them delusional and stupid, but should not accuse them of stealing funds when they had used their personal money to help the company.
On July 8th, a report had come forward which said that the two founders of the crypto hedge fund had gone into hiding and were not cooperating. Zhu admitted that they had gone into hiding, but said that it was because they had received death threats.
However, the 3AC co-founder clarified that they had still been in communication with the relevant authorities. As for Davies, he said that the whole situation was an unfortunate one and they were aware that a lot of investors had suffered hefty losses.
The duo explained that they had been bullish before the collapse and since they expected a turnaround in the market, they had placed a number of trades on leverage. He said that things had not gone as planned. Davies also asserted that the fund had performed quite well when the crypto market was doing well.