A brash co-founder of bankrupt cryptocurrency hedge fund 3AC has said he has “no regrets” that the company has lost billions in investor money.
Kyle Davies and his business partner Su Zhu are facing more than $3.5 billion in creditor claims after their once-successful fund crashed during the 2022 crypto crisis.
While Zhu was arrested and served three months in prison for failing to cooperate with the curators, Davies managed to avoid the same fate by remaining on the run.
During an appearance this week on the Unchained podcast, where he declined to reveal his location, Davies grinned when asked if he had any remorse about losing billions in investor money.
‘Do I think it’s a shame that a company is going bankrupt? No, just as companies go bankrupt, doesn’t almost every company go bankrupt?’ he said.
Kyle Davies, the co-founder of bankrupt crypto hedge fund 3AC, grinned as he refused to apologize for the loss of billions in investor money, saying “almost every company goes bankrupt, right?”
Kyle Davies and his business partner Su Zhu (right). In September 2023, Zhu was arrested at Singapore’s Changi Airport for contempt of court after ignoring orders to comply with receivers.
Davies and Zhu founded 3AC, or Three Arrows Capital, in 2012 and raised billions from investors as cryptocurrencies skyrocketed.
At its peak, the fund managed around $18 billion, but suffered heavy losses when the cryptocurrencies LUNA and Terra collapsed.
According to Capital.comThen the founders defaulted on loans after their hedge fund failed, which also stemmed in part from their loans from more than two dozen institutions.
As investors demand their billions back, court orders in the British Virgin Islands, and then in Singapore and the US, have struggled to catch Davies.
In September 2023, Zhu was arrested at Singapore’s Changi Airport for contempt of court after ignoring orders to comply with receivers, but Davies claimed in his podcast appearance this week that they were unaware they were wanted.
When asked by host Laura Shin if he planned to fire the lawyers who allegedly failed to tell them about the trial date, he said, “Maybe we should.”
He said Zhu clearly did not know because otherwise he would never have entered Singapore. Therefore, he has not returned to the country despite renouncing his US citizenship to obtain Singaporean citizenship.
“Su’s prison sentence has certainly taken him by surprise, no one wants to go to prison,” Davies added New York Magazine.
Su Zhu (left) was wanted by officials in Singapore, the Virgin Islands and the US after failing to cooperate with administrators. Zhu was arrested last year and served three months behind bars, and Davies is still on the run
Davies has refused to offer his location, and viewers of his recent podcast appearance reacted angrily to his cavalier attitude to losing billions
Davies (left) and Zhu (right). At its peak, the fund managed around $18 billion, but suffered heavy losses when the cryptocurrencies LUNA and Terra collapsed.
During an appearance this week on the Unchained podcast, where he declined to reveal his location, Davies grinned when asked if he had any remorse about losing billions in investor money.
Davies has also been sentenced by Singaporean authorities to the same four-month prison term as Zhu, but his whereabouts have remained a mystery – although he reportedly told the newspaper he was in Portugal in February.
He added that while he will not return to Singapore “immediately” given the threat of a prison sentence, he felt that “obviously these things will resolve at some point, but there are settlements.”
Many have reacted furiously to Davies’ attitude in the podcast appearance, as he seemed to take a light-hearted approach to talking about the lost money.
‘It’s about how you build or what you do about it. We are definitely doing our best,” he said when asked about his regrets.
‘We can add value in various ways. At the very least, we can even tell the next Three Arrows how to do better if they go bankrupt.”
His talk about ‘building up’ the collapsed companies comes as a lot of attention has also been paid to a startup in April 2023 by the founders of 3AC, OPNC, a bankruptcy claims exchange.
According to Coin BureauOPNX was formally reprimanded by Dubai’s crypto regulator for operating an unregulated exchange within a month of its founding.
The stock exchange was closed in February 2024.
Zhu still regularly offers crypto advice on his well-followed Twitter account
AC3’s demise came at the same time that fellow crypto heavyweights faced a similar fate, including Sam Bankman-Fried (pictured center), who faces more than 100 years behind bars
And as Davies enters the crypto sphere, Zhu – who was released for good behavior in December – has remained active during his Twitter accountwhere he still provides trading advice.
Their demise came at the same time that fellow crypto heavyweights were also facing the fallout, as many said vulnerabilities in the cryptocurrency industry were becoming increasingly apparent.
Sam Bankman-Fried, the founder of the infamous Bahamas crypto firm FTX, was convicted of one of the largest financial frauds in history while Zhu was behind bars.
He is awaiting sentencing, scheduled for March 28. He faces more than 100 years behind bars.
At the same time, former Binance CEO Changpeng Zhao pleaded guilty to anti-money laundering offenses, and the trader behind Luna – who contributed to the collapse of 3AC – was ordered extradited to the US and South Korea.
While Bankman-Fried has been convicted by US prosecutors as one of the worst financial criminals in history, the disgraced trader blamed the wider cryptocurrency collapse in 2022 squarely on 3AC.
“I suspect they account for 80 percent of the total original contamination,” he said New York Magazine in 2022.
“They weren’t the only people who erupted, but they did it much bigger than anyone else. And before that they had much more trust from the ecosystem.’
