Founders of the beleaguered crypto lending and borrowing firm Three Arrows Capital (3AC) say they received death threats following the collapse of their company, and that's what compelled them to disappear.
See Also: Here Is Everyone (For Now) 3 Arrows Capital (3AC) Owes Money To
In a recent interview with Bloomberg News, Kyle Davies and Su Zhu said they wanted to "keep a low profile" after their firm went bankrupt. They also denied claims that they pulled money out of the company before it filed for Chapter 15.
“People may call us stupid. They may call us stupid or delusional. And, I’ll accept that. Maybe," Zhu said. "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.”
Zhu, who spoke from an undisclosed location after several weeks of silence, addressed how 3AC became insolvent, and the subsequent death threats compelled them to disappear.
“For Kyle and I, there’s so many crazy people in crypto that kind of made death threats or all this kind of noise," Zhu said. "We feel that it’s just the interest for everyone if we can be physically secured and keep a low profile."
A lawyer present on the interview call with Bloomberg said the founders will ultimately live in the UAE.
“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,” Zhu said.
Zhu called the collapse of 3AC “regrettable” and blamed leveraged trades in the hope that the falling crypto market would rebound.
The founders initially believed that the Terra blockchain was on its way to achieving big things, but failed to realize that Luna was capable of falling to effective zero in a matter of days. This would catalyze a credit squeeze across the industry and put significant pressure on all of 3AC’s illiquid positions.
“So I just think that you know, throughout that period, we continued to do business as usual," Zhu said, citing how the volatility of Bitcoin was "extremely painful."
"That ended up being kind of the nail in the coffin,” he added.
Zhu also discredited the 1,157-page affidavit drafted by liquidator Russell Crumpler and published by 3AC’s restructuring firm, Teneo, which stated that the founders spent $50 million as a down payment for a luxury yacht and millions more on a bungalow in Singapore.
“We were never seen in any clubs spending lots of money. We were never seen, you know, kind of driving Ferraris and Lamborghinis around. This kind of smearing of us, I feel, is just from a classic playbook of, you know, when this stuff happens, when funds blow up, then you know, these are kind of the headlines that people like to play,” he said.
According to 3AC’s bankruptcy filing, the firm had over $3 billion of assets under management as of April 2022.
The filing states that 3AC owes about 27 crypto firms around $3.5 billion, with its biggest creditor being crypto brokerage Genesis, which loaned the fund $2.3 billion.
