Three Arrows Capital Founders Finally Speak From Undisclosed Location, Refute Claims Of Fraud

Three Arrows Capital Founders Finally Spoke.

The founders of the collapsed crypto hedge fund 3AC have shared their side of the story from a hidden location in the UAE, according to Bloomberg.

A few weeks ago, the crypto market went berserk. This went from bad to worse after the collapse of Terra Luna and TerraUSD (UST). A number of crypto firms collapsed, with some crypto firms filing for bankruptcy. One of them is the Three Arrows Capital (3AC) based out of Singapore. Since then, the firm’s two founders, Kyle Davis and Su Zhu, have been hiding. Now, they’ve reached out to share their side of the story.

Didn’t Pull Money Out Of 3AC

Recent reports had revealed that the two founders diverted investor funds to put a down payment on a luxury yacht just before the firm went under with billions of investor funds. However, the two are now denying these claims, saying that the payment for the yacht was actually made sometime last year. According to Zhu, they put their own money into the business, trying to save it.

She said,

“People may call us stupid. They may call us stupid or delusional. And, I’ll accept that. Maybe. But they’re gonna, you know, say that I absconded funds during the last period, where I actually put more of my personal money back in. That’s not true.”

While they’ve been hiding, the two maintain that they’ve kept in contact with their lawyers and the authorities. Their hiding only sums up as a protective measure due to some people issuing death threats against them.

Zhu said,

“That does not mean that we haven’t been communicating with all relevant authorities. We have been communicating with them from day one.”

Not Extravagant

The two sought to dispel the perception that they led extravagant lives at the expense of 3AC investors. Zhu was quick to point out some facts:

“We were never seen in any clubs spending lots of money. We were never seen, you know, kind of driving Ferraris and Lamborghinis around.”

In his view, the headlines flying around about them being extravagant were as a result of the media smear campaign after the collapse of their firm and the subsequent lawsuits filed by investors.

3AC Was Too Close To Do Kwon

Going on, Zhu noted that the firm’s closeness to Terra’s Do Kwon may have contributed to its adversities when the Terra coins collapsed. The collapse of the coins was too fast and shocking. Their close relationship with Do Kwon blinded them from seeing the red flags before the collapse.

“We began to know Do Kwon on a personal basis as he moved to Singapore. And we just felt like the project was going to do very big things and had already done very big things. If we could have seen that, you know, that this was now like, potentially like attackable in some ways, and that it had grown too, you know, too big, too fast.”

The Fall Of BTC Was The Nail In The Coffin

Besides being hugely affected by the collapse of Terra, 3AC was also affected by the fall of Bitcoin from $30k to the $20k range. The firm had bought $1 billion worth of shares at Grayscale’s GBTC investment package. The fall of BTC meant a fall of the value of these shares.

“So I just think that you know, throughout that period, we continued to do business as usual. 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.”

What’s Next?

While they didn’t disclose where they were, their lawyer intimated that they may be in the UAE. However, they said they would be heading to Dubai to determine whether the earlier plans to move the firm from Singapore to Dubai were still workable.

Zhu said,

“Given that we had planned to move the business to Dubai, we have to go there soon to assess whether we move there as originally planned or if the future holds something different for us. For now, things are very fluid and the main emphasis is on aiding the recovery process for creditors.”