{"id":10197,"date":"2022-07-21T12:33:04","date_gmt":"2022-07-21T09:33:04","guid":{"rendered":"https:\/\/alfacash.blog\/?p=10197"},"modified":"2024-02-19T21:50:36","modified_gmt":"2024-02-19T18:50:36","slug":"crypto-contagion-three-arrows-downfall-millionaire-victims","status":"publish","type":"post","link":"https:\/\/alfacash.blog\/cs\/2022\/07\/21\/crypto-contagion-three-arrows-downfall-millionaire-victims\/","title":{"rendered":"Crypto Contagion: Three Arrows\u2019 downfall and its millionaire victims"},"content":{"rendered":"

We\u2019re now used to scam and hack attempts and some failed coins around. If we\u2019re careful, there\u2019s no big deal. But what happens when the bad thing it\u2019s completely out of our control? This may be the case with Three Arrows Capital (3AC), a massive crypto fund that just collapsed. <\/strong>And it\u2019s not alone, because a crypto contagion of liquidity issues among other companies and services seems to be spreading from that event.<\/p>\n\n\n\n

The reason is simple: 3AC had investments, partnerships, and, above all, millionaire loans with numerous crypto companies<\/a>. This fund was somehow reliable because it exists since 2012. Founded by Zhu Su and Kyle Davies, it didn\u2019t have big problems until now. They even managed up to $10 billion in assets and investments at one point. \u00a0<\/p>\n\n\n\n

\"Three-Arrows-Capital-Crypto\"
Three Arrows Capital (3AC) logo from its official webpage.<\/figcaption><\/figure><\/div>\n\n\n\n

It\u2019s all smoke and mirrors today, though. They owe around $3.5 billion to over 32 companies worldwide.<\/strong> Rumors of bankruptcy started in June, and now they\u2019re more than confirmed. A long bankruptcy filing was published<\/a> recently by the consulting firm Teneo, the appointed liquidator by a British Virgin Islands court.<\/p>\n\n\n\n

The document is very revealing by itself, along with the complete absence of answers by 3AC founders. Currently, they\u2019re nowhere to be found, while everyone is trying to seize the fund\u2019s remaining assets. Several bankruptcies and\/or financial issues inside the crypto world have followed since 3AC never paid them previous loans.<\/p>\n\n\n\n

What happened with Three Arrows?<\/strong><\/h2>\n\n\n\n

According to the affidavit filed by Russell Crumpler (from Teneo), things started to go south for 3AC due to the previous Terra (LUNA) collapse<\/a>. They had at least $600 million in LUNA tokens, which are now practically worthless.<\/strong> The fund also invested in other tokens that performed badly during the last months.<\/p>\n\n\n\n

In mid-June, several millionaire transactions in crypto by 3AC were discovered on-chain. Although, they weren\u2019t paying their margin calls to their creditors, and the founders started to ghost everyone. DRB Panama (the crypto exchange Deribit), one of its creditors, discovered these operations but they \u201cwere unable to identify to whom the Company\u2019s funds had been transferred and for what purposes the Company\u2019s funds had been transferred.\u201d<\/p>\n\n\n\n

\"Bitcoin-companies-anonymous-addresses\"<\/figure><\/div>\n\n\n\n

However, it was possible to know that at least $31 million in stablecoiny<\/a> were transferred to Tai Ping Shan Limited, a Cayman Islands company indirectly owned by Su Zhu and Kyle Davies\u2019s partner, Kelly Kaili Chen. This still could be a debt payment but isn\u2019t even the worst part.<\/p>\n\n\n\n

\u201cYo, uhh, hmm\u201d, yachts, bungalows, and <\/strong>silence<\/h3>\n\n\n\n

Apart from the \u201cparlous\u201d financial issues in 3AC, the liquidators discovered that Su Zhu and Kyle Davies, amid this crisis, decided to make a down payment of $50 million for a superyacht.<\/strong> As the filing reads, \u201cMr. Davies intends this yacht to be larger than any yacht owned even by Singapore\u2019s richest billionaires\u201d. It\u2019s speculated that the yacht was purchased with borrowed funds.<\/p>\n\n\n\n

And that wasn\u2019t the only expensive purchase by 3AC founders recently. Su Zhu bought a Good Class Bungalow for around $35 million in Singapore, in March 2022. This one is being held in trust for his three-year-old son \u2014presumably, to keep it out of the reach of creditors. Another $20 million bungalow in Singapore<\/a> is owned by Su Zhu\u2019s wife.<\/p>\n\n\n\n

\"Three-Arrows-crypto-bungalow\"
An example of a Good Class Bungalow in Singapore. Listing by Michael Ciola<\/a>.<\/figcaption><\/figure><\/div>\n\n\n\n

In the interim, Three Arrows Capital was put into liquidation without informing its creditors or its third director (Mark Dubois). Zhu and Davies went on \u201cradio silence\u201d, <\/strong>and only sent their lawyers to deal with these issues. The last communications weren\u2019t satisfactory for its creditors, either. One of them, now trending, shows how Blockchain.com asks for its money, and the 3AC answer is literally \u201cYo\u2026 uhh\u2026 hmm\u201d.<\/p>\n\n\n\n

\n

And when can you pay back the loan, by the way…?

"Yo

uh

hmm" pic.twitter.com\/oB7K0aHFEI<\/a><\/p>— Jack Niewold \ud83e\udee1 (@JackNiewold) July 18, 2022<\/a><\/blockquote>