3AC Blames Collapse on Confidence in Terra
- 3AC’s founders have opened up about their close ties with Terra, which they said caused them to overlook possible red flags.
3AC’s collapse was one of the biggest stories of the previous month. The crypto hedge fund fell shortly after Terra’s stablecoin lost its dollar peg and saw its price crash down to nothing. 3AC’s founders have now admitted to its close ties with the failed Terra, which they said caused it to overlook glaring red flags.
The hedge fund had to pay a heavy price for its neglect as several investors lost their earnings and the company was forced to file for bankruptcy. The company’s founders, Su Zhu and Kyle Davies, admitted that the success of the bull market led it to be overconfident, which triggered a wave of bad decisions.
In addition, Zhu acknowledged their friendship with Terra founder Do Kwon caused 3AC to believe in Terra’s future and success. He also admitted that his company’s close ties with Terra caused them to ignore some warning signs regarding the stablecoin provider, which ultimately resulted in their $500 million investment losing all of its value. Zhu claimed that they failed to recognize that Terra was attackable and had grown “too big, too fast.”
3AC founders believe investing in LUNA, now known as Luna Classic, was unquestionably a setback for their organization. However, the true problem started when Bitcoin (BTC) plummeted below $20,000 and the company was unable to obtain more financing. Even after LUNA’s demise, according to Zhu, business continued as usual. He said,
Throughout that period, we continued to do business as usual. But then yeah, after that day, when, you know, Bitcoin went from $30,000 to $20,000, you know, that, that was extremely painful for us. And that was in, that ended up being kind of the nail in the coffin.
3AC’s founders caused a stir after reports emerged that they were nowhere to be found, and some claimed the businessmen had run into hiding to avoid further legal damage. However, both parties denied leaving public sight to avoid their failure and instead claimed to have retreated out of the spotlight for security reasons.
Zhu and Davies claimed that they had received multiple death threats from people who had allegedly lost their funds in the company’s demise. The duo revealed plans to relocate to Dubai. However, they did not offer further clarity on their whereabouts.
The owners of the failed hedge firm further cleared the air over the $50 million boat that was mentioned in the newly filed court case and refuted any claims that they withdrew money before 3AC declared bankruptcy. Zhu claimed that the yacht was purchased a year ago, before the current drama began. According to him, the luxury yacht was bought to be used in Europe.
3AC is yet to come out of the hot waters it found itself in as a result of its piling debt. The firm reportedly owes 27 crypto companies, with the biggest creditor being Genesis Asia Pacific Pte Ltd. It remains to be seen how 3AC intends to come out of this situation.