Su Zhu & Kyle Davies: Three Arrows Capital

Ran crypto's most arrogant hedge fund. Blew up $3.5 billion. Su Zhu tried to flee by sea.

Su Zhu and Kyle Davies were the founders of Three Arrows Capital (3AC), a crypto hedge fund that became legendary for two things: its size and its founders' unshakeable arrogance. Su Zhu in particular became notorious for his Twitter proclamations about "supercycles" and his absolute conviction that crypto could only go up.

3AC leveraged itself to the eyeballs. The fund borrowed from virtually every major crypto lender - Genesis, Voyager, BlockFi, Celsius - and plowed the money into positions including a massive bet on LUNA/UST, Grayscale Bitcoin Trust (GBTC) arbitrage trades, and various altcoins. When LUNA collapsed in May 2022, 3AC's portfolio imploded.

The damage was catastrophic and contagious. 3AC owed $3.3 billion to creditors. Its collapse triggered a chain reaction that took down Voyager, Celsius, BlockFi, and Genesis in quick succession. One hedge fund's blowup became a cascading failure that wiped out half the crypto lending industry.

When the fund collapsed, Su Zhu and Kyle Davies disappeared. They ghosted creditors, liquidators, and courts. Su Zhu then had the audacity to launch a new crypto exchange called OPNX (Open Exchange) from Dubai - a platform for trading bankruptcy claims. The crypto community was incredulous.

In September 2023, Su Zhu was arrested at Changi Airport in Singapore while apparently trying to leave the country. He was sentenced to four months in prison for contempt - failing to cooperate with liquidators. Kyle Davies remains at large, believed to be in Bali. The liquidation process continues, and creditors expect to recover pennies on the dollar.