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3AC co-founder returns to Twitter, blames liquidators for “baiting”

12 Jul 2022
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Su Zhu, co-founder of Singapore-based crypto venture capital firm Three Arrows Capital (3AC), returned to Twitter after nearly a month of inactivity. In another cryptic tweet, he blamed liquidators for baiting them with respect to StarkWare tokens.

The tweet with attached mail from legal counsel claimed that Starkware equity had a token warrant that expired on July 5 and that the liquidator didn’t exercise the warrant, resulting in the loss of Starkware tokens. Zhu blamed liquidators for not using the Starkware tokens and claimed they baited the firm to use information in court.

The cryptic tweet from the co-founder comes days after 3AC filed for a Chapter 15 bankruptcy in a New York court after it failed to meet several margin calls from its lenders. The rumors about the firm’s insolvency began in June and later, a British Virgin Islands court-ordered liquidation of 3AC funds.

3AC’s trouble began with the bear market turmoil in May that was fueled by the Terra (LUNA) — now called Terra Classic (LUNC) — ecosystem crash. Later, it was revealed that the crypto hedge fund had accumulated $559 million worth of locked LUNA, which depreciated to $650 after the crash. The firm also held a significant position in Solana (SOL) and Avalanche (AVAX), which fell to new lows in the same time frame.

With the crypto market crash, most cryptocurrencies lost nearly 70% of their valuation from the top. 3AC also held significant positions in synthetic assets such as Grayscale Bitcoin Trust (GBTC) and Lido’s Staked ETH (stETH). So when the prices of top cryptocurrencies dipped to a four-year low, it led to a series of liquidations for the troubled crypto hedge funds. It has been estimated that 3AC accumulated nearly $400 million in liquidation across multiple platforms.

Related: Voyager Digital issues notice of default to Three Arrows Capital

The apparent insolvency of 3AC has affected lenders across the board with Voyager filing for bankruptcy last week after the hedge fund defaulted on a $500 million loan. BlockFi also struggled with its business after the crypto hedge fund defaulted on a $1 billion loan.

The recent tweet from the 3AC co-founder comes amid rumors about the founders of the crypto hedge fund going missing and attracted a wild reaction from the community. Many questioned his whereabouts while others mocked him for expecting “good faith” from liquidators after losing million of investors’ funds. One user wrote:

“Zhu really over here talking about “good faith” lmao”

Another user called out Zhu for playing the victim card and wrote:

“This is a pretty standard “spin” for the architects of financial destruction once things hit the legal stage. Zhusu is playing the “victim” card in the court of public opinion. Disgusting behavior, but to be expected at this stage.”