Checking back on 3AC’s $3 billion mess
At the start of this week, the creditors of Three Arrow Capital convened are coming together to brainstorm and perhaps share some empathy. Not long ago, 3AC fully succumbed in light of the ongoing crypto winter, declared themselves financially unable to meet their obligations. This astonishing turn of events was the end result of a rough decline that notably began with the disastrous collapse of $LUNA and subsequently TerraUSD.
Not even 11 Crypto Punks could save them.
Now, all those who entrusted their money to 3AC and contributed to their staggering $3 billion in liabilities are scrambling to reclaim their investments. Concurrently, several international governments are seeking justice according to their own protocols, while trying to ensure that they don't end up with overlapping bankruptcy filings.
Meanwhile, 3AC’s leaders Su Zhu Meanwhile, Kyle Davies and Zhu are missing in action. Their Singapore office has been locked up tight, left only with a stack of old mail .
Before any resolutions can be made on these missteps, there's still the matter of clearly defining what those missteps are. The full scope of 3AC's assets remains ambiguous, as does the identity of their creditors.
Currently, active legal proceedings against 3AC are underway in both New York City and the British Virgin Islands. Notably, the latter has appointed Russell Crumpler and Christopher Farmer from bankruptcy management firm Teneo to oversee the liquidation process, serving as a kind of hospice for struggling companies. Unfortunately, they report experiencing nothing but silence from Zhu and Davies as noted in an affidavit filed by Crumpler on July 9th.
This document marks the second time Crumpler has testified on this issue, and it pleads with the Singapore government to intensify its efforts on their home turf regarding 3AC.
In order to gather the necessary data to comprehend the extent of the issues they need to address, Crumpler and Farmer are going to need to push harder than ever. The ugly side The nature of blockchain's anonymous transactions rears its head in this situation. Crumpler’s most recent affidavit details a multitude of transactions to and from different wallet addresses linked to 3AC that occurred in the aftermath of their financial crisis, transferring assets to... locations unknown. Even the specialists at Teneo are unclear about where these assets went.
Only Zhu and Davies know for certain the whereabouts of those assets. And just where are they?
In the second affidavit, Crumpler mentions that he had planned to partake in an \"introductory Zoom call\" with Zhu and Davies upon the request of their legal counsel, well after the liquidating duo had earnestly attempted to connect with them. Reportedly, when the Zoom session started, 3AC's attorneys stated that Zhu and Davies had been unavailable due to threats they'd been receiving in the wake of the scandal. Additionally, Crumpler's affidavit indicates that the two did join the call, but their video was muted and neither responded to inquiries aimed at them. It appears that their attorneys are primarily stepping in to help delay matters.
While they do what? Get up to no good?
Experiencing failure is one thing—it’s not uncommon and is a required part of growth. Mistakes are often forgivable, but the behavior displayed by Zhu and Davies in this situation symbolizes every stereotype the hesitation that hinders the credibility of cryptocurrency despite its vast possibilities. They're acting cowardly, shirking responsibility for their actions. They're exposing themselves as individuals seeking quick financial gains. Accountability demands time and effort.
Their actions also border on criminality—not only due to those dubious transfers but for several other pivotal developments.
To elaborate, Zhu has been covertly working to sell off his property and apparently divert the proceeds into his personal account rather than alleviating the hardships faced by the investors who primarily funded his lavish lifestyle. Crumpler's second affidavit also accuses Zhu and Davies of orchestrating a $50 million shipment yacht to be delivered in Italy later this month—likely funded by borrowed money. Could it be that all this is merely an elaborate performance art piece staged to garner funds for an escape? That would at least add an interesting twist to this narrative.
On a serious note, it seems that the creditors are looking out for their own interests at this point. At least for the moment, as the bureaucratic process unfolds at a speed that is only pleasing to those on the government’s payroll. For instance, crypto brokerage Genesis Global Trading has already launched its own legal action to reclaim $1.2 billion from 3AC, which is only a small portion of the total $2.36 billion they lent to the company, diminished as a result of Genesis's parent firm deciding to absorb a share of their dues. Digital Currency Group It caught many by surprise that Genesis had lent such a sizable amount to 3AC.
noted, “That figure is significantly more than previously reported.” Cointelegraph Crumpler's affidavit aims to secure a hold on additional lawsuits to provide the necessary time to analyze 3AC’s current predicament—regardless of whether its founders are involved in the matter or not.
In the realm of cryptocurrency, things shift at breakneck speed, occasionally too fast for their own welfare. This tumultuous situation continues to unfold rapidly, making it easy to lose track of events. Stay alert for updates following today’s creditors' meeting, and keep attuned for any signs of life from the individuals behind 3AC.
Su Zhu, Co-founder, CEO, and Chief Investment Officer at Three Arrows Capital
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Disclaimer
In line with the Trust Project guidelines Vittoria Benzine is an art writer and personal essayist from Brooklyn who covers contemporary art with an emphasis on human stories, counterculture, and chaos magic. Her work appears in Maxim, Hyperallergic, Brooklyn Magazine, and more.
