3AC Co-Founder Su Zhu Alleges DCG and FTX Conspired to Attack LUNA and stETH
Three Arrows Capital co-founder Su Zhu alleged on Twitter that DCG and FTX conspired to attack LUNA and stETH. He accused them of engaging in misdirection.
Su Zhu, a co-founder of the bankrupt fallen hedge fund Three Arrows Capital, launched a tirade on Twitter over the Terra collapse. Zhu blamed the Digital Currency Group and FTX for working together to attack Terra’s LUNA token and stETH. The latter incident cascaded into 3AC becoming insolvent.
Here's rough summary of dcg situation
1) they conspired w FTX to attack Luna and steth and made a fair bit doing so
2) they took substantial losses in the summer from our bankruptcy as well as Babel, and other firms involved in gbtc
3) they could've calmly restructured then
— Zhu Su
(@zhusu) January 3, 2023
Zhu posted the Twitter thread on Jan. 3, saying that DCG ‘conspired’ with FTX “to attack Luna and stETH and made a fair bit doing so.” He added that the firm “fabricated a left pocket right pocket callable promissory note that magically filled the hole.”
He also accused DCG and FTX of engaging in misdirection and using various methods to attack the hedge fund. Essentially, he alleged that DCG and FTX used the collapse of 3AC to take more deposits while insolvent, hoping that the market would go up.
Zhu also referred to the stETH depeg briefly in the post. The incident saw the Lido-offered token trade below ETH’s price, which resulted in worries about cascading effects.
Winklevoss Has Harsh Words for DCG Founder
DCG and its founder Barry Silbert have been drawing controversy for other reasons as well. Gemini co-founder Cameron Winklevoss tweeted an open letter to Silbert, criticizing him for bad tactics. The exchange, DCG, and its parent company Genesis are working towards a resolution on returning user funds.
Winklevoss said that DCG is “engaging in bad faith stall tactics.” He also noted that Silbert had refused to “agree to a timeline with key milestones.”
Three Gemini users have also filed a request for class action arbitration against Genesis and DCG. This is in response to Gemini halting its Earn program after Genesis froze withdrawals.
Silbert has responded to the letter, denying any missed payments. He plainly states that “DCG did not borrow $1.675 billion from Genesis.” He also claimed that DCG made a proposal on Dec. 29 and had not received any response.
Three Arrows Capital Saga Continues
There have been several updates in the 3AC saga in the past few months. A bankruptcy judge approved a subpoena involving the leadership, including co-founders Su Zhu and Kyle Davies. Meanwhile, liquidators have filed a $30 million claim for a super yacht.
Liquidators have said that the founders are not cooperating with the investigation. This, in turn, makes it difficult to compensate creditors. They have said that the two founders have undermined recovery efforts.
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