From Crypto King to Cuffs: The Rollercoaster Journey of Su Zhu and Three Arrows Capital
The Ascent to Crypto Royalty
Su Zhu, alongside his partner Kyle Davies, started 3AC in 2012 with a simple premise: arbitrage in emerging market forex derivatives. But as crypto began its ascent, 3AC pivoted, diving headfirst into the digital currency markets. By March 2022, they were managing an estimated $10 billion in assets, becoming crypto's new darlings, with Zhu gaining over 500,000 Twitter followers for his market insights and sometimes cryptic tweets. The fund's strategy included betting big on projects like Ethereum, Polkadot, and Solana, making Zhu and Davies the crypto equivalent of rock stars in a financial mosh pit.
The Descent into Digital Darkness
However, the crypto market, known for its volatility, was about to teach Zhu a harsh lesson. The summer of 2022 was not kind to 3AC or its founders. The firm had heavily invested in Terra's LUNA, which catastrophically imploded, dragging 3AC into a financial black hole. Zhu, who had touted a "supercycle" where crypto prices would only go up, had to admit his thesis was "regrettably wrong." Overleveraged and caught in a vicious cycle of margin calls, 3AC couldn't weather the storm. By June 2022, a British Virgin Islands court ordered its liquidation, revealing debts of $3.5 billion.
The Aftermath and Arrest
Zhu and Davies didn't just fade into obscurity; they made headlines for the wrong reasons. After 3AC's collapse, the duo was rumored to be living it up in Bali, learning to surf and, according to some, enjoying some psychedelic escapism. But the law had different plans. In September 2023, Zhu was arrested at Changi Airport in Singapore while trying to leave the country, sentenced to four months in prison for failing to cooperate with liquidators. The saga of 3AC was now marked not just by financial ruin but by legal repercussions.
Lessons from the Ledger
The rise and fall of Su Zhu and Three Arrows Capital is a cautionary tale for the crypto community. It underscores the perils of over-leverage, the dangers of falling in love with one's own hype, and the reality that in crypto, the only constant is change. Zhu's journey from a crypto kingpin to a cautionary figure in handcuffs is a stark reminder of how quickly fortunes can flip in this digital wild west.
In the end, Zhu's story is not just about one man's fall from grace but a reflection on the crypto market's maturation, where accountability, regulatory scrutiny, and the harsh lessons of risk management are becoming as central as the technology itself. For those still riding the crypto wave, 3AC's saga is a reminder to keep one hand on the tiller and one eye on the horizon, lest they too become part of the next great crypto crash narrative.