Three Arrows Capital

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Three Arrows Capital
Company typePrivate
IndustryHedge fund
Founded2012; 12 years ago (2012)
FoundersKyle Davies, Su Zhu
DefunctJune 27, 2022; 22 months ago (2022-06-27)

Three Arrows Capital (also known as 3AC or TAC) was a Singapore-based cryptocurrency hedge fund which was ordered to liquidate on 27 June 2022 by a court in the British Virgin Islands.[1] It was founded in 2012 by Kyle Davies and Su Zhu.[3][4][5] The company borrowed billions of dollars to fund its trading, and according to July 2022 bankruptcy filings, faces $3.5 billion in creditors' claims.[6][7] The fund appears to have lost in excess of $3 billion over 2021 and 2022, making its collapse one of the largest hedge-fund trading losses of all time.[citation needed]


Kyle Davies and Su Zhu first met at Phillips Academy, and both studied at Columbia University before working for Credit Suisse for brief spells before setting up Three Arrows in 2012.[8][9] In its early years, the company was focused on arbitraging emerging-market foreign-exchange derivatives and engaged in the practice of finding mispriced derivatives on electronic platforms and keeping them even if banks asked to cancel or amend the trades. This strategy, however, resulted in the fund only earning fractions of a cent for each dollar that was traded. This practice continued until banks started to cut off the fund from that market in 2017, which began the company's shift to cryptocurrencies.[10]

The fund's last public statement claimed a net asset value of $18 billion.[11] Blockchain analytics firm Nansen estimated in March 2022 that Three Arrows managed about $10 billion in cryptocurrency assets,[12] although there is speculation that most of their visible assets were sourced by uncollateralized borrowing from various lending platforms.[citation needed]

The firm's founders amassed a large following on Twitter with cryptocurrency-related topics. Su Zhu had more than 500,000 followers shortly before the fund failed. The firm backed projects including Aave,[13] Avalanche, Luna,[14] Worldcoin,[15] BlockFi,[16] Deribit,[14] Ethereum,[14] Polkadot,[14] Solana,[14] and WOO Network.[17] According to a January 2021 SEC filing, Three Arrows owned almost 39 million units of Grayscale Bitcoin Trust (GBTC) at the end of 2020.[18] The firm invested approximately $200 million in LUNA tokens in February 2022.[4][19][20]

In April 2022 Bloomberg reported that Three Arrows was planning to move its headquarters to Dubai from Singapore.[21] However, on June 24, 2022, Dubai's regulator confirmed that Three Arrows was not registered with the Dubai Financial Services Authority.[22]

Cryptocurrencies experienced broad declines in the first half of 2022, with most tokens losing more than 50% of their market valuation.[23][24] LUNA, in which Three Arrows had invested and Su Zhu actively promoted on Twitter, collapsed to near zero in May 2022.[25] The spread between Grayscale GBTC trust unit prices and spot Bitcoin prices widened throughout 2021 and 2022, with the trust units trading at a 34% discount to the trust NAV on 17 June 2022.[26]

Licensing and regulatory issues[edit]

A class action, Patterson v. TerraForm Labs Pte Ltd. et al., was filed against Three Arrows and others in the United States District Court for the Northern District of California on 17 June 2022.[27] This case has since been dismissed.[citation needed]

On 30 June 2022, the Monetary Authority of Singapore (MAS) said it had reprimanded Three Arrows for breaching its allowed threshold of having no more than $250 million Singapore dollars in assets under management, a condition of its August 2013 fund management company registration.[28] Three Arrows was further reprimanded for providing false or misleading information to MAS, and failing to notify MAS of changes to directorships or shareholdings.[28]

In October 2022, it was reported that Three Arrows Capital was under investigation by both the U.S. Securities and Exchange Commission and the Consumer Financial Protection Bureau to determine whether or not the firm had misled its investors over the status of its balance sheet, and if the firm should have registered with both agencies.[29]


On 16 June 2022, the Financial Times reported that Three Arrows had failed to meet its margin calls.[30] On 22 June, The Wall Street Journal reported that Three Arrows had failed to repay money lent from cryptocurrency broker Voyager Digital.[31] On 27 June 2022, Voyager Digital issued a notice of default against Three Arrows for failing to make the required payments on a Bitcoin and USD Coin loan worth more than $665 million.[32] On the same day, a court in the British Virgin Islands ordered the liquidation of Three Arrows Capital, overseen by Teneo. The Joint Liquidators are Russell Crumpler and Christopher Farmer, both Senior Managing Directors of Teneo.[1][33][34]

On 2 July 2022, Three Arrows filed for Chapter 15 bankruptcy to protect its US assets from creditors.[35] The firm's CEO, Stephen Ehrlich, attributed the decision in part due to Three Arrows' inability to pay back its loan from Voyager.[36]

Genesis Trading's CEO Michael Moro announced on Twitter that Genesis Trading had incurred substantial losses from loans to Three Arrows and that its parent firm Digital Currency Group has assumed certain liabilities of Genesis related to Three Arrows to ensure adequate operating capital.[37]

The company's collapse is believed to be partially responsible for the bankruptcy and failure of the crypto lender Voyager Digital and layoffs at FTX founder and CEO Sam Bankman-Fried blamed the company for causing a ripple effect that caused the bankruptcy of other crypto firms or led those firms to freeze assets during the 2022 cryptocurrency crash.[38][10]

According to court liquidation papers, Davies and Zhu have not been cooperating in the liquidation process of Three Arrows Capital, and their whereabouts was unknown as of 8 July 2022.[39] Three Arrows Capital owes 27 creditors a total of US$3.5 billion.[40]

In an interview with Bloomberg held at an "undisclosed location" in July 2022, Zhu and Davies remarked that they plan to move to the United Arab Emirates,[41] a country that does not have extradition agreements with either Singapore or the United States.[citation needed]

According to the New York Times, during the June 2022 liquidation process, Zhu and Davies were in Bali, where Zhu tried surfing and Davies dabbled in painting.[42] Since 2022, Zhu and his family relocated to Singapore, where they lived in a "good-class bungalow" with a "permaculture farm — an elaborate system of lakes and gardens meant to replicate self-sustaining ecosystems in nature. It’s home to ducks, chickens and numerous types of dragonflies."[42] Davies was described as having moved on from Three Arrows Capital and quoted as saying, “I really spent so much time meditating in Bali that I’m really just pretty zenned out.”[42]

In June 2023, Three Arrows liquidators said they were seeking to recover $1.3 billion from Davies and Zhu.[43]


In late 2022, Zhu and Davies started another cryptocurrency-related venture called Open Exchange based in Hong Kong to some negative reactions from financial institutions and investors.[44] In June 2023, Open Exchange began offering its own cryptocurrency, and Davies commented on Twitter that "I’m getting early 3AC vibes all over again... Nothing compares to the energy of a startup."[42]

Arrest of Su Zhu[edit]

In late September 2023, Zhu was arrested at Changi Airport in Singapore,[45] while trying to leave the country.[46] Zhu was arrested pursuant to committal orders which sentenced him to four months in prison for failing to cooperate with the company's liquidators.[47] Davies' location remained unknown,[45] but he is subject to the same committal order as Zhu.[47]


  1. ^ a b c "Crypto hedge fund Three Arrows Capital plunges into liquidation". Sky News. Retrieved 29 June 2022.
  2. ^ "Crypto Hedge Fund Three Arrows Files For Chapter 15 Bankruptcy". Bloomberg. 1 July 2022. Retrieved 30 July 2022.
  3. ^ "Singapore-based crypto hedge fund's cryptic tweet fuels speculation over losses". The Business Times (Singapore). Retrieved 15 June 2022.
  4. ^ a b Ng, Serena (17 June 2022). "Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout". The Wall Street Journal. Retrieved 17 June 2022.(subscription required)
  5. ^ "Ethereum ($ETH), Not Bitcoin ($BTC), Favorite for These Crypto Whales". Bloomberg News. 25 May 2021. Retrieved 15 June 2022.
  6. ^ "Three Arrows Liquidators Seize $40 Million as Asset Probe Widens". Bloomberg. 21 July 2022. Retrieved 30 July 2022.
  7. ^ "3AC". 15 August 2022.
  8. ^ "Another Big Crypto Player Just Blew Up". New York. 17 June 2022. Retrieved 19 June 2022.
  9. ^ "Founders of $10 Billion Crypto Hedge Fund Have 'Ghosted' After Bets Go Bad". Vice. 17 June 2022. Retrieved 19 June 2022.
  10. ^ a b Wieczner, Jen (15 August 2022). "The Crypto Geniuses Who Vaporized a Trillion Dollars". Intelligencer. Retrieved 9 September 2022.
  11. ^ "Cryptocurrency 'bloodbath' threatens multibillion-dollar hedge fund". The Guardian. 15 June 2022. Retrieved 16 June 2022.
  12. ^ "Crypto Hedge Fund's Tweet Fuels Speculation Over Losses". Bloomberg News. 15 June 2022. Retrieved 15 June 2022.(subscription required)
  13. ^ "Silicon Valley bets on crypto projects to disrupt finance". Financial Times. 3 June 2021. Retrieved 15 June 2022.
  14. ^ a b c d e "Three Arrows Capital's Zhu Su speaks out after $400 million liquidation due to Celsius and Terra's LUNA fiasco". FXStreet. 15 June 2022. Retrieved 15 June 2022.
  15. ^ "Three Arrows Capital Invests In Worldcoin". Worldcoin About Page. Retrieved 15 June 2022.
  16. ^ "Three Arrows Capital Invests In BlockFi After Its Series B Round". Fortune. Retrieved 15 June 2022.
  17. ^ "WOO Network raises $30M Series A from Three Arrows Capital, PSP Soteria Ventures, Gate Ventures, QCP Capital, Capital, and others". Cision. Retrieved 15 June 2022.
  18. ^ "A major crypto hedge fund is wobbling as $10 billion Three Arrows Capital sees a spate of liquidations". Fortune. Retrieved 19 June 2022.
  19. ^ Ostroff, Caitlin (24 May 2022). "What Happened to TerraUSD's Bitcoin Reserves". The Wall Street Journal. Retrieved 15 June 2022.(subscription required)
  20. ^ "Some investors got rich before a popular stablecoin imploded, erasing $60 billion in value". CNBC. 29 May 2022. Retrieved 15 June 2022.
  21. ^ "Three Arrows Capital Moving Headquarters to Dubai From Singapore". Bloomberg News. 29 April 2022. Retrieved 15 June 2022.
  22. ^ "Dubai regulator says 3AC does not have a license to operate in the emirate". The Times Hub. 24 June 2022. Retrieved 24 June 2022.
  23. ^ Gura, David (17 June 2022). "Why cryptocurrencies have gone from the next hot thing to a full-on meltdown". NPR. Retrieved 23 June 2022.
  24. ^ Driebusch, Corrie; Vigna, Paul (18 June 2022). "The Crypto Party Is Over". Wall Street Journal. Retrieved 23 June 2022.
  25. ^ "Terraform Again Halts Blockchain Behind UST Stablecoin, Luna". Bloomberg News. 13 May 2022. Retrieved 13 May 2022.
  26. ^ "YCharts GBTC Discount or Premium to NAV". Retrieved 30 July 2022.
  27. ^ "Patterson v. TerraForm Labs Pte Ltd. et al". PacerMonitor. Retrieved 18 June 2022.
  28. ^ a b "MAS Reprimands Three Arrows Capital for Providing False Information and Exceeding Assets Under Management Threshold". Monetary Authority of Singapore. Retrieved 30 June 2022.
  29. ^ "US Regulators Probing Bankrupt Crypto Hedge Fund Three Arrows Capital". 17 October 2022. Retrieved 21 November 2022.
  30. ^ "Crypto hedge fund Three Arrows fails to meet lender margin calls". Financial Times. 16 June 2022. Retrieved 16 June 2022.(subscription required)
  31. ^ Huang, Vicky Ge (22 June 2022). "Crypto Broker Voyager Digital Says Three Arrows Capital Hasn't Repaid $666 Million in Loans". Wall Street Journal. Retrieved 23 June 2022.
  32. ^ "Crypto hedge fund Three Arrows Capital in default on $665 million loan". The Washington Post. Retrieved 28 June 2022.
  33. ^ Ng, Serena; Ostroff, Caitlin; Ge Huang, Vicky (29 June 2022). "Crypto Hedge Fund Three Arrows Ordered by Court to Liquidate". Wall Street Journal. Retrieved 30 June 2022.
  34. ^ Knauth, Dietrich (11 July 2022). "Three Arrows liquidators asks U.S. court to force crypto founders to cooperate". Reuters. Retrieved 18 July 2022.
  35. ^ Roth, Emma (2 July 2022). "Crypto hedge fund Three Arrows files for bankruptcy". The Vere. Retrieved 3 July 2022.
  36. ^ Milmo, Dan (6 July 2022). "Cryptocurrency broker Voyager Digital files for bankruptcy protection". The Guardian. Retrieved 6 July 2022.
  37. ^ Milmo, Dan (6 July 2022). "Michael Moro 3AC Tweet". Retrieved 6 July 2022.
  38. ^ Roth, Emma (15 August 2022). "Crypto hedge fund's collapse leaves behind angry lenders and a $150 million "Much Wow" yacht". The Verge. Retrieved 9 September 2022.
  39. ^ "Three Arrows Founders' Whereabouts Are Unknown, Foiling Liquidators". Bloomberg News. 11 July 2022. Retrieved 11 July 2022.
  40. ^ "3AC-BVI-Liquidation-Recognition-1st-Affidavit-of-Russell-Crumpler-Filed" (PDF). 18 July 2022. Retrieved 18 July 2022.
  41. ^ Ossinger, Joanna; Shen, Muyao; Yang, Yueqi (22 July 2022). "Three Arrows Founders Break Silence Over Collapse of Crypto Hedge Fund". Bloomberg News. Archived from the original on 31 October 2022. Retrieved 9 September 2022.
  42. ^ a b c d Yaffe-Bellany, David (9 June 2023). "Their Crypto Company Collapsed. They Went to Bali". The New York Times. ISSN 0362-4331. Retrieved 15 June 2023.
  43. ^ "Three Arrows Liquidators Seek $1.3 Billion From Fund's Founders". Bloomberg News. 27 June 2023. Retrieved 29 June 2023.(subscription required)
  44. ^ Yu, Elaine; Soon, Weilun; Osipovich, Alexander (19 May 2023). "A Crypto Hedge Fund Imploded. The Comeback Isn't Going So Well". Wall Street Journal. ISSN 0099-9660. Retrieved 15 June 2023.
  45. ^ a b Melinek, Jacquelyn (29 September 2023). "Three Arrows Capital co-founder Zhu arrested in Singapore airport, sentenced four months in prison". TechCrunch. Retrieved 29 September 2023.
  46. ^ Wieczner, Jen (29 September 2023). "Crypto Fugitive Su Zhu Has Been Arrested". Intelligencer. Retrieved 30 September 2023.
  47. ^ a b Lu, Yiwen (29 September 2023). "A Founder of the Crypto Hedge Fund Three Arrows Capital Is Arrested". The New York Times. ISSN 0362-4331. Retrieved 30 September 2023.

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