Death threats compelled us to disappear: 3AC Founders

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Founders of beleaguered crypto lending and borrowing firm Three Arrows Capital (3AC) Kyle Davies and Su Zhu on July 22 claimed that death threats, following the collapse of their company, compelled them to disappear.

In an interview with Bloomberg, the absconding duo termed as “regrettable” the collapse of their company, but denied claims that they pulled out money before the company went bankrupt.

“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 (with) funds during the last period, where I actually put more of my personal money back in. That’s not true,” the duo was quoted to have said.

Speaking from an undisclosed location after several weeks of silence, the founders of the insolvent firm went on to say that death threats started pouring in, compelling 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. We feel that it’s just the interest for everyone if we can be physically secured and keep a low profile,” Zhu said and claimed to be in contact with relevant authorities.

Plan on moving to the UAE

Declining to reveal their whereabouts, one of the lawyers present on the interview call said the ultimate destination of the founders was 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.

3AC collapsed due to leveraged trades

Zhu said the collapse of the crypto firm was “regrettable” and added that it happened due to leveraged trades in the hope that the falling crypto market would rebound.

Survived LUNA crash, but Bitcoin bled 3AC

The founders initially believed that the Terra blockchain was on its way to achieving big things, but failed to realise that Luna was capable of falling to effective zero in a matter of days and that this would catalyse a credit squeeze across the industry that would put significant pressure on all of 3AC’s illiquid positions.

“So, I just, 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,” Zhu said.

Not into a lavish lifestyle

Discrediting 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 another S$48.8 million to purchase a bungalow in Singapore, Zhu said the yacht, that was to be built and employed in Europe was purchased about a year back and that he only had two houses 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 (AUM) as of April 2022.

The filing states that 3AC owes nearly 27 crypto firms around $3.5 billion, with its biggest creditor being crypto brokerage Genesis, which loaned the fund $2.3 billion.