Welcome back to the Deep Dive. I have a stack
of documents on my desk today that honestly reads
less like a financial report and more like, I
don't know, the screenplay for a really dark,
really expensive satire. We've got court filings
from the British Virgin Islands, leaked WhatsApp
messages, liquidation reports. And interviews
conducted from... Undisclosed locations. Exactly.
It is quite the stack. Usually when we look at
financial collapses, we're dealing with pretty
dry, boring things, interest rate mismatches,
regulatory gray areas, dull accounting errors.
But today, we are looking at something entirely
different. We are looking at three arrows capital
or three AC. And just to set the stakes here
for you, we are not talking about some small
hedge fund having a bad quarter. No. Not at all.
We were talking about the firm that was for a
brief moment, kind of like the central bank of
the crypto universe. Right. When they collapsed
in 2022, they didn't just lose their own money.
No. They vaporized roughly three and a half billion
dollars of other people's money. They left a
blast radius that took down lenders, exchanges
and thousands of retail investors. And that is
the what? But the how and the who are what we
are digging into today, because the main characters
here, Suzu and Kyle Davies, they aren't your
typical, you know, Bernie Madoff villains who
hide in the shadows. They are. Well, they're
distinct. That's a diplomatic way to put it.
We are talking about guys who. ghosted their
creditors to go surf and baller we're talking
about a 150 million dollar yacht named much wow
and you can't forget the permaculture farm in
singapore oh right filled with specific breeds
of dragonflies it's just But our mission today
isn't just to gawk at the absurdity. It's to
figure out how two high school friends convinced
the smartest lenders in the world to give them
billions of dollars with. And I was shocked when
I read this. Almost no collateral. How does that
even happen? Well, it happens because of a very
specific type of modern delusion. It's a story
about what happens when you mistake leverage
for genius. And to understand the collapse, you
really have to understand the psychology that
built the machine in the first place. So let's
rewind. Before the yacht, before the billions,
before the prison sentences, who are these guys?
Because in the photos I've seen, they look like
pretty standard finance bros. And that's where
it starts, surprisingly, in a very traditional
way. Suzu and Kyle Davies met at Phillips Academy
in Andover. Okay, so Phillips Academy. That is
the elite of the elite. That's old money, prestige,
the whole nine yards. Exactly. It's a feeder
school for the Ivy League. Yeah. And that's exactly
where they went. They both landed at Columbia
University. They followed the golden path of
finance, good school, math degrees, and then
straight onto the trading floor at Credit Suisse.
This is important context, I think. They weren't
crypto -native hackers living in a basement mining
Bitcoin on a laptop. No, not at all. They were
institutional. They spoke the language of Wall
Street. They did. And that pedigree is, I think,
partially what allowed them to get away with
so much later on. But they didn't stay in Credit
Suisse for very long. They had an itch. In 2012,
they quit the bank and launched Three Arrows
Capital. 2012. Wow. Bitcoin is barely a blip
on the radar then. Were they buying crypto back
then? No. And this is the part of the story most
people miss. For the first five or six years,
Three Arrows Capital wasn't a crypto fund at
all. It was an FX arbitrage fund. Okay, let's
pause there. FX arbitrage. We hear this term
arbitrage a lot. Break that down for us. What
were they actually doing day to day? So in the
simplest terms, arbitrage is, you know, finding
the same item sold for two different prices in
two different places. And you pocket the difference.
Sue and Kyle focused on emerging market foreign
exchange derivatives, specifically NDFs, non
-deliverable forwards. That sounds incredibly
dry. Why those currencies specifically? Why not
just trade the euro or the US dollar? Because
the major markets are just too efficient. Everyone
knows the price of the euro down to the microsecond.
But in emerging markets, think the Indonesian
rupee, the Korean one, the Indian rupee, the
pricing can get messy. Electronic trading platforms
would sometimes show a price that was lightly
stale or slightly different from the real market
price. So they were hunting for glitches, like
mistakes in the matrix. Essentially, yes. They
wrote code to scrape these electronic platforms.
If a bank's computer said the price was X but
the real market was Y, 3AC would just smash the
buy button, lock in the profit, and then sell
it instantly. That sounds risky. Or is it free
money? In theory, it is free money. It's supposed
to be risk -free profit. But here's the catch,
and this tells you everything you need to know
about Sue and Kyle's psychology. To make real
money on these tiny price differences, you have
to trade massive volume. We're talking about
picking up fractions of a penny millions and
millions of times. The steamroller strategy.
Exactly. Picking up pennies in front of a steamroller.
But the steamroller here wasn't the market crashing.
It was the banks themselves. See, the banks hated
this. Why? I mean, if the bank posted the price,
surely they have to honor it. You would think
so. But in the fine print of these electronic
trading agreements, banks often have a last look
clause. It basically says, oops, that price was
a mistake. We're canceling the trade. So the
bank can just call a do -over to say, just get
it. Yes. And most traders, when a bank cancels
a trade, they say, OK, sorry about that. Let's
maintain the relationship. We want to keep trading
with you tomorrow. Sue and Kyle. They did the
absolute opposite. What did they do? They fought
every single cancellation. Really? They would
refuse to let the banks back out. They'd quote
the rule book. They'd threaten legal action.
They would basically hold the trade hostage and
say, you posted the price, you have to pay us.
They were incredibly aggressive. So they're biting
the hand that feeds them. That seems really short
-sighted. It was. They treated the banks as adversaries
to be beaten, not as partners. And it worked
for a while. They made millions. But you can
only poke the bear so many times. By 2017, the
major banks, we are talking the big global players,
had had enough. They started deplatforming 3AC.
They got kicked out of the casino. They did.
They had the capital. They had this hyper -aggressive
mindset. But they had nowhere left to trade.
The FX market was effectively closed to them.
And this is a crucial pivot point. It's 2017.
Where do you go if you have a high risk tolerance,
a lot of cash, and you hate the traditional banking
system? You go to crypto. You go to crypto. And
this is where the story shifts gears. They took
that same exact strategy, aggressive, leverage
heavy, finding inefficiencies, and applied it
to a market that was the wild west. It's like
taking a Formula One driver who's used to a pristine
track and just dropping them into a demolition
derby. That's a perfect analogy. So let's talk
about the rise. Once they made that switch, they
didn't just participate. I mean, they dominated.
They scaled incredibly fast. By March of 2022,
the blockchain analytics firm Nansen estimated
they managed about $10 billion in crypto assets.
And 3AC's own last public statement claimed a
net asset value, or NAV, of $18 billion. $18
billion. That is a staggering number. But wait,
if they started with millions from FX trading.
How do you get to 18 billion in five years? Even
with crypto going up as much as it did, that
math seems aggressive. That is the right question
to ask. And the answer is borrowing. There's
significant evidence, and certainly looking at
the bankruptcy filings now, that most of those
visible assets weren't really theirs in the traditional
sense. What do you mean? They were sourced from
uncollateralized borrowing. Uncollateralized
borrowing. Okay, let's unpack that. If I go to
a bank for a mortgage, I have to pledge the house.
If I don't pay, they take my house. What does
uncollateralized mean in this context? It means
they were borrowing on a handshake and a reputation.
They would go to a lender like, say, Voyager
or Genesis and say, look at our assets, look
at our track record, lend us $500 million in
Bitcoin. And because 3AC was the golden child
of the industry, the lenders just said yes. Without
asking for $500 million worth of insurance or
some other asset to back it up. Often with very,
very little. Or they would accept collateral
that was itself just other volatile crypto tokens.
It was a house of cards built on trust. And frankly.
FOMO from the lenders. And Suzu made sure to
maintain that image. Right. He wasn't exactly
keeping a low profile during all this. Not at
all. He became a massive influencer. He amassed
over half a million Twitter followers. They weren't
just traders. They became the thought leaders
of this super cycle. The super cycle. I remember
this vividly. This was the thesis that crypto
was done with the boom and bust cycles. From
now on, it was just going to go up forever because
of institutional adoption. That was the thesis.
Up only. And because they were so loud about
it and because they had so much money under management,
people believed them. They backed major projects.
I mean, if you look at their portfolio, it was
a who's who of the 2021 bull run. Like what?
AAV, Avalanche, WorldCoin, BlockFi, Deribit,
Ethereum, Polkadot, Solana, WO Network, you name
it, they were in it. It sounds like they just
bought the entire market. They practically did.
But they had a few specific bets that were absolutely
massive. And these are the ones that eventually
came back to haunt them. And the biggest one,
the one we really need to understand, is the
Grayscale Bitcoin Trust, or GBTC. Okay, GBTC.
In the sources, this comes up over and over again.
It was their primary engine of wealth, and then
their coffin. But I'll be honest, the mechanism
here is a little confusing. Why would you buy
grayscale Bitcoin instead of just buying Bitcoin?
This is the multibillion dollar question. To
understand this, you have to understand that
back in 2020 and 2021, big institutional investors,
pension funds, retirement accounts, they couldn't
just go to Coinbase and buy Bitcoin. Right. Regulations
didn't allow it. Right. Their charters wouldn't
allow them to hold magic internet money directly.
Right. They need a regulated product, something
that looks like a stock they can see in their
brokerage account. Exactly. And GBTC was the
only game in town. It was a trust that held Bitcoin
and you could buy shares of the trust. But because
it was the only way for big money to get exposure,
those shares traded at a massive premium. Give
me a number. What kind of premium are we talking
about? At times, their shares were trading 40
% higher than the value of the Bitcoin that was
actually inside the trust. Wait, let me get this
straight. So if I have $100 worth of Bitcoin
in the trust, people are paying $140 just to
own the paper claim to it? Yes. It sounds insane,
but that was the market inefficiency. And Sue
and Kyle, you have to remember, are arbitrage
traders at heart. They saw this and said, this
is free money. Walk me through the trade. How
did they exploit this? It's a loop, a beautiful,
simple loop. Step one, you borrow Bitcoin from
a lender. Step two, you give that Bitcoin to
Grayscale. In exchange, Grayscale issues you
shares of GBTC at the net asset value, basically
the base price, the one -to -one price. Okay.
So I handed over $100 of Bitcoin. I got back
a share that the market says is worth $140. I've
just made $40 instantly. On paper, yes. But there's
a catch, a big one. The lockup period. You can't
sell those newly created shares for six months.
You have to hold them. Ah, okay. So you're betting
that in six months, that premium will still be
there or even be higher. Correct. They were betting
that the hunger for Bitcoin from institutions
would stay so high that the shares would always
be worth more than the coins. And for a long
time, they were right. They did this loop over
and over again. Borrow Bitcoin, convert to GBTC,
wait six months, sell to huge profit, pay back
the loan and keep the difference. Yeah. It was
a money printer. Until it wasn't. Until it wasn't.
Until Canada launched a Bitcoin ETF. Until other
options appeared. Suddenly, institutional investors
didn't need GBTC anymore. The demand dried up.
And that premium, it didn't just vanish, it flipped.
It went negative. Deeply negative. It went to
a discount. Suddenly, that share backed by $100
of Bitcoin was trading for $80, $70 on the open
market. And 3AC is holding how much of this stuff?
As of the end of 2020. They held almost 39 million
units. They were the largest single holder in
the world. And remember, they borrowed the Bitcoin
to create those shares. So now they owe the lender
one Bitcoin. But the asset they hold, the GBTC
share, is worth less than one Bitcoin. They are
completely underwater. And because they used
leverage, they didn't just lose their profit,
they lost the principal. And unlike a normal
stock, they couldn't just sell the underlying
asset. You cannot redeem GBTC shares for actual
Bitcoin. It's like the Hotel California. You
can check in, but you can't check out. So they
were trapped, just trapped in a burning building
with no exit door. Exactly. That is terrifying.
But they didn't stop there, did they? Because
I guess if you're losing money on one massive
bet, the gambler's fallacy says you should double
down on another one. Enter Lunanay. Right. While
the GBTC trade was slowly bleeding them out,
they made a massive directional bet on Lunanay.
In February of 2022, they invested approximately
$200 million in Lunanay tokens. $200 million.
And this wasn't an arbitrage play, was it? This
was just, I believe in this project. This was
pure ideology. Suzu was close with the founders
of Terraluna. He believed in the algorithmic
stablecoin model. It was a statement play. He
was signaling to the market the super cycle is
real and Lunene is the future. He was all over
Twitter pumping it. And we all know how that
ended. We do. In May 2022, Lunene collapsed.
It went to zero. And it happened so fast that
$200 million, it essentially evaporated in a
matter of days. So just to recap the situation.
we have a fund that is trapped in an illiquid
gbtc position that is trading at a huge discount
we have a 200 million dollar hole from lunine
and on top of all that The entire crypto market
is crashing because of macroeconomics inflation,
the Fed raising rates. The dominoes were perfectly
aligned. All it needed was a push. And that push
was the broader market decline in June of 2022.
Bitcoin dropped. Ethereum dropped. And this is
when the margin calls start coming in. Let's
talk about that moment, the catalyst. Because
a margin call is basically a lender calling you
up and saying, hey, the stuff you gave us as
collateral isn't worth enough anymore. Send more
cash or we sell your stuff. Exactly. And usually.
A fund will sell some liquid assets to cover
it. But 3AC didn't have liquid assets. Their
money was stuck in GBTC, or locked in private
equity deals for projects that hadn't even launched
yet, or it was completely vaporized in L &A.
They had no cash. So what do they do? Do they
call up their lenders and say, hey guys, we're
in a bit of a bind, let's work this out? No.
They went dark. This is the ghosting phase. Lenders
were calling, emailing, sending messages on Telegram.
Nothing. Just radio silence. I cannot imagine
being a lender at Voyager Digital or Genesis
realizing you lent hundreds of millions of dollars
to these guys and they just won't pick up the
phone. It creates absolute panic. On June 16,
2022, the Financial Times broke the story that
3AC had failed to meet margin calls. That was
the death knell. Once that news is out, every
other lender rushes to liquidate whatever tiny
bits of collateral they do have. It's a run on
the bank, but the bank is 3AC. Precisely. On
June 22, The Wall Street Journal reported they
failed to repay loans to Voyager Digital. Then
on June 27, Voyager issued a formal notice of
default. 3AC failed to pay a loan worth more
than $665 million. Wow. That was in Bitcoin and
USDC. $665 million just gone, defaulted on. And
that same day, June 27, the legal hammer came
down. A court in the British Virgin Islands ordered
the liquidation of Three Arrows Capital. They
appointed a firm called Tenio to oversee the
whole mess. So the party is officially over.
It was. By July 2, 3AC had filed for Chapter
15 bankruptcy in the U .S. to protect its assets
from being seized. And the filings? They revealed
the true extent of the damage. They owed 27 different
creditors a total of $3 .5 billion. Five billion.
And the fund itself, what was the final tally
of the loss? The fund lost in excess of $3 billion
over 2021 and 2022. It goes down as one of the
largest hedge fund trading losses of all time,
period. It's just hard to even wrap your head
around those numbers. But what makes this story
so critical is that 3AC didn't die alone. They
took people with them. This is the contagion
we talked about in the intro. That's the so what
of this story. Why does it matter if one hedge
fund fails? It matters because 3AC was so interconnected,
they were borrowing from everyone. So when they
defaulted, those lenders suddenly had massive
holes in their own balance sheets. Voyager Digital
being the prime example here. Voyager was a direct
casualty. The 3AC default was partially, if not
mostly, responsible for Voyager's own bankruptcy.
They had lent a huge chunk of their customers
money to 3AC. When 3AC couldn't pay, Voyager
couldn't pay its customers. I want to pause on
that for a second. Why on earth would Voyager
lend that much money, customer money, to one
single counterparty? It just seems unbelievably
reckless. It was. But you have to remember the
environment at the time. 3AC was considered the
risk -free rate of crypto. They were seen as
too big to fail. Voyager thought if we lend to
Sue and Kyle, we're safe. They were chasing yield.
3AC was paying very high interest rates to borrow
that crypto. Voyager needed that yield to pay
their own customers those high rates they were
advertising. It was a yield trap. And it wasn't
just Voyager, was it? No, not by a long shot.
Genesis Trading, one of the biggest prime brokers
in the entire space, was hit hard. Their CEO,
Michael Morrow, announced substantial losses
from loans to 3AC. Their parent company, DCG,
actually had to step in and assume the liabilities
just to keep Genesis from collapsing right then
and there. Even blockchain .com had to do layoffs
because of the impact. Correct. It rippled everywhere.
Even Sam Bankman Freed, and I know it is so ironic
to quote him now given everything that happened
later with FTX, but even he at the time blamed
3AC for causing the ripple effect that froze
assets across the industry. He saw 3AC as the
first big domino that destabilized the whole
system. It's wild to think about that timeline.
3AC falls, which weakens everyone else. It creates
this massive credit crunch. And then a few months
later, FTX itself collapses. It was just a brutal,
brutal year. It was a systematic unwinding of
leverage. One piece fell and took all the others
with it. Now, here is where the story shifts
from a financial tragedy to, I don't even know
what to call it, a farce, a mystery. Because
while their company is imploding, while creditors
are screaming for their billions. Suzu and Kyle
Davies decide to pull a vanishing act. This is
the ghosting phase we mentioned. Liquidators
from Teneo reported that Davies and Zu were simply
not cooperating. They weren't answering questions.
They weren't providing documents. As of July
8, 2022, their whereabouts were officially unknown.
Just gone, like Interpol notice, gone. Pretty
close to it. They eventually surfaced for an
interview with Blingberg, but even that was conducted
from an undisclosed location. In it, they mentioned
they were planning to move to the UAE. Which
conveniently has no extradition treaty with Singapore
or the U .S. Precisely. They were running. And
while they were running, details started coming
out about the lifestyle they left behind. And
this is where we absolutely have to talk about
the yacht. The yacht. Much wow. That was the
name. Much wow. A nod to the doge meat. Of course
it was. Because nothing says Syria's institutional
grade financial firm. Like a doge meme on a mega
yacht. It was a $150 million vessel. The sources
say it was purchased, or at least commissioned,
during the peak of their success. But as the
liquidity crisis hit, it became the symbol of
their excess. $150 million that could have gone
to creditors sunk into a boat named after a meme.
It's almost too perfect a metaphor for the whole
situation. But they weren't on the yacht when
this all went down, were they? No. While the
liquidation was happening in June 2022, while
their employees were wondering if they still
had jobs, the New York Times reported that Sue
and Kyle were in Bali. Bali, surfboards and smoothie
bowls. Suzu was reportedly trying surfing for
the first time. Kyle Davies was dabbling in painting
and meditating. I have to quote Davies here because
this line drove me crazy when I read it. He said,
and I quote, I really spent so much time meditating
in Bali that I'm really just pretty zenned out.
It is a staggering lack of self -awareness. Or.
Maybe it's the ultimate awareness. What do you
mean? You've just destroyed billions of dollars
of wealth. People have lost their life savings
because of the contagion you caused. And you
are zenned out painting in Bali. It's so far
beyond normal human reaction. It's the ultimate
pivot. From Master of the Universe to Zen Monk
in three easy steps. It feels like a defense
mechanism. If you pretend it doesn't matter,
maybe the guilt doesn't crush you. Or perhaps
it reveals how they viewed the money all along
as numbers on a screen. A game. And if the game
resets, you just go meditate until the next round
starts. And we can't forget the Singapore residents.
Before they fled... Zhu and his family lived
in what's called a good class bungalow in Singapore.
Which is real estate speak for unbelievably obscenely
expensive mansion. Yes. But it wasn't just a
house. It had a permaculture farm. A permaculture
farm. An elaborate system of lakes and gardens
designed to replicate self -sustaining ecosystems.
It was home to ducks, chickens, and as you mentioned,
numerous types of dragonflies. There is something
deeply, deeply ironic about that. They were obsessed
with building a self -sustaining ecosystem in
their backyard, filled with dragonflies and ducks,
while simultaneously destroying the financial
ecosystem they were a part of. It speaks to a
certain type of mindset, I think. The desire
to control complex systems. Whether it is an
algorithmic trading strategy or a permaculture
pond, they believe they could engineer a perfect
loop. But in finance, unlike in a pond, you can't
control the external variables. You can't control
the Fed. You can't control panic. And you definitely
can't control the price of LNA. So they're in
Bali. They're zenned out. The yacht is somewhere.
Actually, I read the yacht was repossessed before
it was even fully delivered, right? That's correct.
The shipbuilder eventually sold it to someone
else. Much wow. Never really set sail under their
command. Another perfect metaphor. OK, so the
money is gone, but the law does have a long arm.
Let's fast forward to the consequences. Did they
get away with it? Well, yes and no. It's complicated.
In September of 2023, Suzu was actually arrested.
Finally? Where? At Changki Airport in Singapore.
He was trying to leave the country. Trying to
fly out, probably back to the Zen life. He was
arrested pursuant to committal orders. Basically,
he was sentenced to four months in prison. Four
months? For losing $3 billion? That's incredibly
late. No, and this is a really important distinction.
He wasn't sentenced for the financial loss itself.
Being bad at trading isn't a crime, usually.
Unless there is proven fraud, losing a lot of
money is just losing a lot of money. So what
was the prison time for? He was sentenced for
failing to cooperate with the liquidators. It
was a contempt of court issue. Ah, okay. So it
was for the ghosting, not for the losing. Correct.
And his review of prison was, well, it was surprising.
Do tell. He later described his time in prison
as... Really enjoyable. You're kidding me? Enjoyable?
He said it was enjoyable because he didn't have
internet or caffeine or alcohol. He treated it
like a forced detox retreat. He said he read
books and did push -ups. Only Suzu could turn
a prison sentence into a wellness anecdote. Five
stars? Great for dopamine fasting? Would recommend.
It's unbelievable. It fits the pattern, doesn't
it? Yeah. Reframing every single failure as part
of the grand journey. Meanwhile... Kyle Davies's
location remained unknown during Zoo's arrest,
though he was subject to the same committal order.
He managed to stay out of the net. So Zoo does
his time. Davies is in the win. You would think
after all this public shaming, after the bankruptcy,
after the prison stint, they would just fade
away. Maybe open a real surf shop in Bali. You
would think. But this is where the story gets
into zombie territory. They didn't leave the
industry. Despite the collapse, despite the reputation
damage, they came back. And they didn't just
come back as traders. They started an exchange.
Yes. In late 2022, they launched OPNX, which
stands for Open Exchange, based out of Hong Kong.
And get this, it was a marketplace for trading
bankruptcy claims. That is unbelievably ironic.
They create a market to trade the debt of companies
like the ones they helped destroy. It is the
ultimate cynical pivot. We broke it. Now let
us help you trade the pieces. They were allowing
people who lost money in FTX Celsius. or Voyager
to sell their claims for immediate liquidity.
It feels like an arsonist starting a fire extinguisher
company the very next day. Davies even tweeted
about it. He said, and this is a direct quote,
I'm getting early 3AC vibes all over again. Nothing
compares to the energy of a startup. Early 3AC
vibes. I don't think that's the flex he thinks
it is. Hey, remember that time we started the
thing that eventually imploded and ruined countless
people? I'm getting that feeling again. It shows
a complete disconnect from the trauma they caused.
Or maybe it shows that they know exactly what
they're doing. They know that in crypto, controversy
sells. And they didn't stop there. In early 2024,
they joined as advisors for a platform called
OX .UN. O -X -A -F -U -N. The name alone. Another
exchange. This one, a gamified trading platform
with a dual token model. Gamified trading. Just
what the world needs more of. Because the problem
with crypto is that it wasn't enough like a video
game. And then, late 2024, the cherry on top.
A meme coin, of course. It had to end with a
meme coin. The 3AC token. Yeah. A meme coin project
they were directly connected to. It had a 1 %
transaction tax, high insider concentration,
basically all the red flags of a quick cash grab.
And it faced criticism, I assume. Massive criticism.
It was volatile, illiquid. Basically a microcosm
of everything risky and predatory about crypto
packaged with their infamous brand on it. It's
baffling. If I lost $3 billion, I think I would
change my name and move to a cabin in the woods.
These guys launch a token named after their own
failure. It raises a fascinating question about
the crypto industry itself. In traditional finance,
if you blow up a bank, you are usually done.
You are a pariah. In crypto, notoriety is a form
of currency. The fact that they are famous even
for failure gives them attention, which they
can then monetize. That is a deeply depressing
thought. It rewards the spectacle regardless
of the outcome. Okay, let's bring this home.
We've covered the origin, the rise, the crash,
the yacht, the prison detox, and the zombie comeback.
What is the big takeaway here? The story of Three
Arrows Capital is the definitive lesson in leverage
and contagion in the modern crypto era. It showed
us that the crypto ecosystem was not a decentralized
mesh of independent actors. It was a tightly
wound ball of yarn. When one thread Lunene pulled,
It unraveled 3AC. When 3AC unraveled, it took
down the lenders like Voyager and Genesis. It
was a house of cards where everyone was borrowing
from everyone else to buy the same assets. Exactly.
And the assets backing it all were volatile tokens
that could vanish in value overnight. It was
an $18 billion illusion built on the idea that
the music would never, ever stop. And when the
music stopped, there were no chairs left. And
the people running the game just walked out the
back door to meditate in Bali. Liquidators are
still seeking to recover $1 .3 billion from the
founders. That money belongs to creditors. It
belongs to the people who trusted the system.
And meanwhile, the founders are out there launching
gamified exchanges and trying to get people to
buy their meme coin. Which leads to the provocative
thought for you to think about today. If the
architects of a $3 billion collapse can return
to the industry within two years to launch meme
coins and new exchanges, has the industry actually
learned anything about due diligence? Or are
we all just waiting for the next much wow? I
fear it might be the latter. As long as there
is greed, there will be people like Sue and Kyle
willing to sell the dream of infinite leverage.
On that uplifting note, thank you for listening
to this deep dive into Three Arrows Capital.
It's a wild story, but a necessary one to understand
the world of crypto. Always a pleasure. Keep
questioning the numbers and always ask what the
collateral is. We'll see you next time.