Death threats, a move to Dubai, and a bicycle instead of a Ferrari: the founders of Three Arrows Capital gave an interview

Death threats, a move to Dubai, and a bicycle instead of a Ferrari: the founders of Three Arrows Capital gave an interview

One of the main topics this summer is the collapse of the large cryptocurrency fund Three Arrows Capital. The company, until recently considered a pillar of the digital asset world, went under in a couple of weeks. Since then, the founders of 3AC have been hiding from the scrutiny of creditors, giving no interviews and not appearing in public.

However, Bloomberg reporters managed to briefly lure the entrepreneurs out of their secret shell. In a phone call, Soo Joo and Kyle Davis gave their first interview since the bankruptcy. The crypto investors talked about the state of affairs, life-threatening threats, and commented on rumors of borrower money fraud.

Death threats and forced flight

Zhu and Davis said they were caught in the middle of a storm when the company’s problems became public knowledge. Instantly, theories emerged that the owners of Three Arrows Capital began withdrawing money from creditors shortly before bankruptcy.

Investors assure that this is a lie. In fact, they invested their own money in an attempt to save the situation. According to the entrepreneurs, the 3AC bankruptcy did shock the industry, but there was no malice in the actions of Zhu and Davis.

“People can call us stupid. They can call us dumb or they can call us crazy. And I’ll accept that. Maybe. But they’ll, you know, talk as if I’ve been hiding funds during the last period when I’ve actually invested back even more of my own money. Those rumors aren’t true,” Zhu laments.

Apparently, the angry creditors were in no mood to understand the intricacies of the business process. After the news of the bankruptcy, the founders received death threats. The businessmen assure that they took them seriously.

For this reason, they stopped communicating and started hiding their location. At the same time, the creators of 3AC assure in interviews that they are in close contact with representatives of the law.

The Fall of LUNA and Comrade Do Kwon

Interestingly, the high-profile failure of the cryptocurrency LUNA does not seem to have had a catastrophic effect on Three Arrows Capital. Many experts take the collapse of Terraform Labs as the point of reference of the bankruptcy story. However, the fund’s founders themselves don’t think so.

According to them, the fall of LUNA did lead to financial losses. The company spent $559 million to buy the blocked crypto. However, even after the death of the digital currency and the Do Kwon firm, they felt comfortable. The hedge fund borrowed money from major lenders and conducted business as if nothing had happened.

“Throughout this period, we continued to do business as usual. But then, after that day when bitcoin dropped from $30,000 to $20,000, you know, it was very painful for us. And that became kind of the nail in the coffin,” Zhu says.

Investors genuinely believed in Terra’s success, and the collapse of one of the leading players on the market came as a surprise to them. The company’s too rapid growth had, in a way, blinded everyone around them. No one realized that the inflated bubble could burst at a moment’s notice.

Notably, the founders of Three Arrows Capital began getting close to the owner of Terraform Labs after he fled to Singapore. Apparently, they periodically chat and share their thoughts on the protracted crypto-zine.

The yacht was, the Ferrari was not

Much attention to the personalities of Suu Kyu and Kyle Davis has been drawn to rumors of loan-money manipulation. According to court documents, the businessmen were going to use client assets to buy a yacht. The value of the vessel is about $50 million, with $5 million paid to the shipbuilder as an advance.

Among other controversial moments were the “acquisitions” in real estate:

  • Good Class Bungalows mansion for $48.8 million;
  • A house in an upscale neighborhood in Singapore for $20.4 million;
  • Zhu’s wife’s real estate, worth a total of $4.5 million.

Of course, creditors expect to hear a lot of interesting things during the fund’s liquidation process. They suspect that Three Arrows Capital was regularly addicted to misuse of funds.

The owners of 3AC deny any rumors of illegal operations in their interviews. And Suu Kyu admits that the company purchased an expensive yacht in Italy. It was supposed to be used in Europe, but he did not specify in what way.

But Mr. Zhu talked about his love for bicycles. The investor has allegedly never allowed himself to buy and ride luxury supercars. However, he regularly rode a two-wheeled bike to his office. And that, according to Suh, says a lot about his financial culture.

“We were never seen in any circle of individuals spending a lot of money. We’ve never been seen driving a Ferrari or a Lamborghini. This kind of vilification is a classic playbook. When the big money comes in, that’s when, you know, these kinds of headlines appear. People like to talk about them,” the bankrupt investor believes.

Summary of 3AC interview: Future plans and a move to Dubai

What does the future hold for the creditors of Three Arrows Capital? This question is of interest to many people today. And there is an amount in which the said interest can be assessed – $3.5 billion. And the affected creditors have no idea how the hedge fund management is going to compensate for their losses.

Right now, the entrepreneurs are going to go to Dubai. Even before the collapse of Three Arrows Capital, the fund was announcing plans to move to the Gulf Coast city. It seems the demise of 3AC is not a good reason to cancel those intentions. Davis and Zhu want to travel to the UAE and assess the possibility of a move on the spot.

At the same time, they are working with representatives of the law to liquidate the foundation. Suu Joo and Kyle Davies assure that they are doing all they can to help former clients. However, no concrete steps in this direction have been announced.

According to the latest data, Teneo was able to confiscate about $40 million from 3AC. This includes cryptocurrency assets, NFT and bank accounts. But that’s a drop in the bucket compared to the $3.5 billion the fund owes to 27 different firms. Kyle Davis and Soo Joo don’t seem to have the answers they need for the affected investors.

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