Summary: Su Zhu, co-founder of Three Arrows Capital (3AC) admitted he and his team had close ties with Terra co-founder Do Kwon, which made them overlook red flags that eventually led to their demise, in an interview with Bloomberg.  Both co-founders Zhu and Kyle Davies sat down for an interview where they outlined exactly what went ...

Su Zhu, co-founder of Three Arrows Capital (3AC) admitted he and his team had close ties with Terra co-founder Do Kwon, which made them overlook red flags that eventually led to their demise, in an interview with Bloomberg

Both co-founders Zhu and Kyle Davies sat down for an interview where they outlined exactly what went wrong with their crypto hedge fund. They revealed that they were overconfident due to a multiyear bull market, where they saw lenders gain massive profits by virtue of financing firms like 3AC. 

In addition, they said they were close with Terra founder Do Kwon, and believed he and his project were going to do big things. That led them to invest $500 million in the project with zero return. 

The Terra Network collapsed in early May, when two of their once prized cryptocurrencies, UST and LUNA, plummeted to mere pennies in the course of a week. 

While Davies previously stated that the now beleaguered crypto hedge fund was able to handle the losses from Terra, the ensuing Bitcoin and overall market collapse was insurmountable. In early July, 3AC filed for bankruptcy in New York

“Throughout that period, we continued to do business as usual,” Zhu said in the interview. “But then yeah, after that day, when, you know, Bitcoin went from $30,000 to $20,000, you know, that, that was extremely painful for us. And that was in, that ended up being kind of the nail in the coffin.”

When asked about their whereabouts, after a report surfaced that the two co-founders went into hiding and were unreachable for questioning, they said they had to for security reasons. While they didn’t reveal their current location, they did say they were moving to Dubai. 

 The founders also denied any rumors that suggested they pulled out their money before 3AC went bankrupt. In addition, they said the $50 million yacht, that came out in the court filing, was purchased over a year ago and has a full money trail. 

Author: Tyler Irvin