The founders of tainted crypto hedge fund Three Arrow Capital (3AC), which filed for bankruptcy the first week of July, have finally resurfaced after five weeks with no known whereabouts.
In an interview with Bloomberg, the two founders of the crypto hedge fund Su Zhu and Kyle Davies admitted that the overconfidence born of a multi-year bull market, where lenders saw their value inflate thanks to finance companies like 3AC, led to a series of bad decisions that should have been avoided.
Zhu also revealed his closeness to Terra founder Do Kwon and said they believe the company will do great things. He admitted that the company’s proximity to Terra caused them to overlook some red flags regarding the company, which ultimately led to their $500 million investment plummeting. Zhu explained:
“If we could have seen that, you know, that it was now like, potentially like attackable in some ways, and it had grown too, you know, too big, too fast.”
The two founders claimed that the investment in LUNA (now known as Luna Classic) was surely a setback for the company. Yet the real problem started when Bitcoin (BTC) fell below $20,000 and it became impossible for the company to access additional credit. Zhu claimed that even after the collapse of LUNA, business was business as usual, explaining:
“Throughout this period, we have continued to do business as usual. But yeah, after that day when, you know, Bitcoin went from $30,000 to $20,000, you know, that was extremely painful for us. And it was in, it ended up being kind of the nail in the coffin.
When asked where they were and why they were in hiding, the founders blamed a series of death threats as the reason for going underground. The duo did not reveal their current location, but said they are moving to Dubai.
The founders have denied any allegations of cash withdrawals before 3AC went bankrupt and also purged the air around the $50 million yacht that was leaked in the recently filed lawsuit. Zhu said the boat “was purchased over a year ago and ordered to be built and used in Europe”, adding that the yacht “has a full silver trail”.