According to reports, the founders of the failing crypto hedge fund 3AC have returned after abandoning their creditors with a multibillion-dollar bill for more than a month.
Kyle Davies and Su Zhu, co-founders of Three Arrows Capital (3AC), have reportedly come out of hiding after five weeks as their creditors demand a $2.8 billion return, according to a recent story by Bloomberg.
Zhu tells Bloomberg that due to several death threats being made, the two took a leave of absence.
Davies adds that he and Zhu had complete faith in their trading and investment plans.
“We believed in everything to the fullest. We had all our, almost all of our assets in there. And then in the good times we did the best. And then in the bad times, we lost the most. It’s not a surprise that Celsius, ourselves, these kind of firms, all have problems at the same time. We have our own capital, we have our own balance sheet, but then we also take in deposits from these lenders and then we generate yield on them. So if we’re in the business of taking in deposits and then generating yield, then that, you know, means we end up doing similar trades.”
The collapse of the Terra (LUNA) ecosystem, according to Zhu, also had a significant influence on their business model because everything went south after LUNA lost over 99% of its value in a matter of days.
“What we failed to realize was that LUNA was capable of falling to effective zero in a matter of days and that this would catalyze a credit squeeze across the industry that would put significant pressure on all of our illiquid positions…We had different types of trades that we all thought were good, and other people also had these trades. And then they kind of all got super marked down, super fast. Because LUNA just happened, it was very much a contagion where people were like, ‘OK, are there people who are also leveraged long staked Ether versus Ether who will get liquidated as the market goes down?’ So the whole industry kind of effectively hunted these positions.”