Founders Of Three Arrows Speak Out On Why They Hid Amidst The Platform’s Failure
After five weeks in hiding, the humiliated founders of Three Arrows Capital spoke openly about the tragic demise of their once-flying hedge fund. They claimed to have received threats to their lives, which is why they remained unnoticed. Su Zhu and Kyle Davies, both 35 years old, claimed on Friday that Three Arrows’ margin calls on loans that should never have been made due to their disastrous crypto venture are now descending, according to Bloomberg.
Zhu and Davies attribute Three Arrows’ unexpected demise to their overly optimistic assumptions, with Zhu claiming that they put themselves up for a market “that never materialized.”
In documents submitted on July 8, the liquidators’ counsel indicated that Zhu and Davies had not contacted them and that the location of the firm’s founders was unknown. Zhu stated they had no choice but to go into hiding due to death threats.
Zhu told Bloomberg, “People may label us foolish or deluded.” And I will accept it. Maybe. But they think I stole the money over the last period when I put more of my own money back in. That is not correct.
Zhu and Davies demonstrated a systematic failure of risk management in which the impact of bad bets was magnified by the ease with which credit was available.
The pair acknowledged that the collapse caused substantial pain, but they generally avoided questions about the impact on others in the cryptocurrency ecosystem. Instead, they emphasized their considerable losses while refuting allegations that they withdrew assets from Three Arrows before its bankruptcy. According to the document, Zhu and Davies attributed the hedge fund’s demise to overexposure to Terra, staked Ethereum, and Grayscale’s Bitcoin trust. Zhu remarked that he initially could not observe any warning indications in the instance of Terra.
“What we didn’t anticipate was that Luna might fall to zero in a matter of days, triggering a credit squeeze across the industry and putting great pressure on all of our illiquid assets.”
“Bitcoin climbed from $0 to $20,000, which was incredibly challenging for us,” Zhu said after the company “did business as usual.” That was the final nail in the coffin.”
Meanwhile, the two founders have refused to reveal their current location. Nonetheless, one of the lawyers involved in the discussion predicted that their eventual destination would be the United Arab Emirates, which has recently become a crypto center.
Featured Image: Megapixl @iqoncept.
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