Three Arrows Capital’s Founders Says The Firm’s Collapse is “Regrettable”

Su Zhu and Kylie Davies, the co-founders of embattled crypto hedge fund, Three Arrows Capital (3AC) have expressed their regrets about the way the company went bankrupt. In an interview with Bloomberg, the duo noted that they built the company for a target market that never really materialized.

“We positioned ourselves for a kind of market that didn’t end up happening,” said Su Zhu, who was the Chief Executive Officer of the firm until it collapsed. In addition, Kylie Davies noted that “the whole situation is regrettable,” in part because “many people lost a lot of money.” 

The collapse of 3AC was a ripple effect from Terraform Labs which the firm was significantly exposed to. As explained by the duo, the bets made on LUNA, Grayscale Bitcoin Trust (GBTC), and staked Ethereum (ETH) all went sour with the market onslaught that seemed unrelenting since the beginning of the year.

“What we failed to realize was that luna was capable of falling to effective zero in a matter of days,” Zhu said.

Unprecedented Fall

Three Arrows has since been declared insolvent and a British Virgin Island court has since ordered its liquidation. With Teneo Restructuring at the helm of affairs with respect to the restructuring, the list of companies 3AC was owing was published earlier this week and it was revealed that the firm had a liability of $3.5 billion.

A lot of revelations have been made with respect to Three Arrows Capital’s creditors with Su Zhu himself also filing a $5 million claim against the company. While the restructuring procedure is currently ongoing, the duo is exploring avenues to steer clear of public space and the Bloomberg interview comes off as their major appearance since the whole collapse was revealed.

With the loss of funds, the 3AC co-founders confirmed that they have been receiving death threats from some people, and while they refused to state their location, they noted they are enroute to Dubai.

“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.”