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Three Arrows Capital

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Summary

Three Arrows Capital (3AC) was a Singapore-based cryptocurrency hedge fund founded in 2012 by Su Zhu and Kyle Davies that, at its peak in early 2022, managed an estimated $10 billion in assets. Severe losses from the Terra/LUNA ecosystem collapse in May 2022 triggered cascading margin calls and a liquidity crisis that led to court-ordered liquidation in the British Virgin Islands on June 27, 2022, leaving more than $3.5 billion in creditor claims. The founders subsequently faced arrest warrants, prison sentences for non-cooperation with liquidators, a nine-year regulatory ban by Singapore's Monetary Authority, and fines from Dubai's virtual asset regulator over a failed post-collapse exchange venture.

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Background and Founding

Three Arrows Capital Pte Ltd (3AC) was founded in 2012 by Su Zhu and Kyle Davies, both graduates of Columbia University who had previously worked as foreign exchange traders at Credit Suisse. The firm was initially incorporated in San Francisco before being re-registered in Singapore in 2013. 3AC operated primarily as a crypto-focused hedge fund, taking leveraged long positions across major cryptocurrencies and related derivatives. At its reported peak in March 2022, blockchain analytics firm Nansen estimated the fund managed approximately $10 billion in cryptocurrency assets, though subsequent liquidation proceedings suggested a significant portion of its visible asset base was sourced from uncollateralized borrowing across multiple lending platforms.

Sources

Luna/UST Exposure and Collapse Trigger

Three Arrows Capital held a significant position in Terra's LUNA token, with reports indicating the fund invested over $200 million as part of the Luna Foundation Guard's $1 billion capital raise in February 2022; other estimates placed total exposure closer to $560 million. Su Zhu was an active public promoter of LUNA on social media prior to the collapse. When the TerraUSD (UST) algorithmic stablecoin lost its dollar peg in May 2022 and LUNA fell from approximately $80 to near zero within a week, 3AC's position was effectively wiped out. The fund had also borrowed $189 million in USDC and USDT using ETH as collateral, and was unable to repay or increase collateral as prices fell. The combined losses triggered a cascade of margin calls from the more than 20 counterparties to whom 3AC owed funds.

Sources

Court-Ordered Liquidation and Creditor Claims

On June 27, 2022, a court in the British Virgin Islands ordered Three Arrows Capital into liquidation, appointing Teneo's Russell Crumpler and Christopher Farmer as joint liquidators. A 1,157-page filing submitted to U.S. bankruptcy court in July 2022 revealed that 3AC owed approximately $3.5 billion to 27 crypto companies. The single largest creditor was Genesis Asia Pacific Pte Ltd., a subsidiary of Digital Currency Group, which had lent $2.3 billion. Other major creditors included Voyager Digital LLC (over $685 million in bitcoin and ether), Celsius Network (approximately $75 million), FalconX ($65 million), and CoinList Services ($35 million). Notably, 3AC co-founder Su Zhu submitted a personal claim for $5 million and Kyle Davies' wife, Kelly Chen (also referred to as Chen Kelly), submitted a claim for $65 million. In December 2022, liquidators seized $35.6 million in cash held by 3AC in Singaporean banks. By June 2023, Teneo was seeking to recover $1.3 billion directly from Davies and Zhu. In December 2023, a court froze over $1 billion in assets belonging to Su Zhu, Kyle Davies, and Davies' wife.

Sources

Market Contagion

The collapse of 3AC triggered a significant contagion event across the cryptocurrency industry. Voyager Digital filed for Chapter 11 bankruptcy after 3AC failed to repay approximately $670 million it had borrowed. Celsius Network, which was already under stress, was forced to freeze withdrawals and later filed for bankruptcy. Blockchain.com reported substantial losses and conducted layoffs. Digital Currency Group, parent of Genesis, disclosed losses exceeding $1 billion related to the 3AC exposure. The cascading liquidations are widely attributed as a contributing factor to the approximately 48 percent decline in total cryptocurrency market capitalization over May and June 2022.

Sources

Regulatory Actions: MAS 9-Year Ban

On September 13, 2023, Singapore's Monetary Authority of Singapore (MAS) issued prohibition orders against Su Zhu and Kyle Davies under the Securities and Futures Act 2001 (SFA) and Securities and Futures (Licensing and Conduct of Business) Regulations. The orders, effective for nine years, prohibit both individuals from performing any regulated activity and from taking part in the management, directorship, or substantial shareholding of any capital markets services firm in Singapore. MAS cited multiple violations: failure to notify the central bank within the stipulated timeframe that 3AC had employed a new portfolio manager; providing false information to MAS in January 2022 by claiming that person had not engaged in any regulated activity; and failure to maintain an appropriate risk management framework. The period of contraventions was identified as August 2020 through January 2022.

Sources

Arrest of Su Zhu and Committal Orders Against Both Founders

Both Su Zhu and Kyle Davies were issued committal orders by Singapore courts for failing to cooperate with the liquidation process. Each order carried a four-month prison sentence. Su Zhu was arrested at Singapore's Changi Airport on September 29, 2023, while attempting to leave the country. The arrest followed a tip-off to Singaporean authorities by the liquidators at Teneo. Zhu transitioned to home detention in late November 2023, with his sentence ending on December 20, 2023. Kyle Davies, whose current location remained unknown to liquidators, had not been apprehended as of the time of Zhu's arrest. The U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) were also reported in October 2022 to be examining whether 3AC misled investors about its balance sheet and failed to register with the two agencies; however, no formal charges have been publicly confirmed.

Sources

GTX / OPNX Post-Collapse Exchange Venture

In early 2023, Su Zhu and Kyle Davies partnered with CoinFLEX co-founders Mark Lamb and Sudhu Arumugam to launch a new cryptocurrency exchange. A leaked pitch deck revealed the venture was initially named GTX — described as such because 'G comes after F,' a reference to the FTX collapse — before being renamed Open Exchange (OPNX). The platform launched in April 2023 and offered spot and futures trading, as well as a novel service allowing investors to trade bankruptcy claims from insolvent platforms such as FTX and Celsius. In August 2023, Dubai's Virtual Assets Regulatory Authority (VARA) fined OPNX AED 10 million ($2.7 million) for operating without the required regulatory licenses and for violations related to marketing, advertising, and promotions. Su Zhu and Kyle Davies each received individual sanctions of AED 200,000 ($54,451) from VARA. Major crypto firms including DRW denied implied associations with OPNX after the exchange incorrectly suggested their investment. OPNX announced it would shut down by February 14, 2024, with Kyle Davies citing the recovery of FTX bankruptcy claims as reducing the market opportunity.

Sources

Asset Misappropriation Allegations: Much Wow Superyacht

Bankruptcy filings revealed that 3AC co-founders Su Zhu and Kyle Davies had purchased a 171-foot (52-meter) superyacht named Much Wow — a reference to the Doge internet meme — using funds drawn directly from the company. The yacht was ordered from Italian shipbuilder Sanlorenzo. After 3AC's collapse, the purchase contract was terminated by Sanlorenzo and the vessel was put back on the market. Liquidators filed a $30 million claim in the Cayman Islands against Much Wow Ltd., a holding company, to recover the proceeds of the yacht's resale. The yacht was subsequently sold and later bore the name RMF.

Sources

Timeline

2012-01-01

Three Arrows Capital founded by Su Zhu and Kyle Davies in San Francisco with approximately $1 million in seed capital.

Wikipedia / CoinTelegraph

2013-01-01

3AC re-registered in Singapore.

Wikipedia

2022-02-01

3AC invests over $200 million in LUNA tokens as part of the Luna Foundation Guard's $1 billion capital raise.

CoinDesk

2022-03-01

3AC assets under management estimated at approximately $10 billion, near peak.

CNBC

2022-05-09

TerraUSD (UST) loses its dollar peg; LUNA collapses from ~$80 to near zero within days, devastating 3AC's portfolio.

CryptoSlate

2022-06-15

3AC gives a cryptic non-answer when asked by Fortune about potential insolvency amid market speculation.

Fortune

2022-06-27

A British Virgin Islands court orders Three Arrows Capital into liquidation. Teneo appointed as liquidator.

The Block / Decrypt

2022-07-01

3AC files for Chapter 15 bankruptcy in the United States.

Wikipedia

2022-07-19

Bankruptcy filings reveal 3AC owes $3.5 billion to 27 creditors; Much Wow superyacht purchase from company funds disclosed.

Fortune

2022-07-22

Su Zhu and Kyle Davies speak to Bloomberg and break silence after weeks of inaccessibility, with reports they were looking to move to Dubai.

CoinDesk

2022-10-17

Reports emerge that the SEC and CFTC are probing 3AC for alleged investor deception and failure to register with U.S. agencies.

CoinDesk

2022-12-02

Liquidators seize $35.6 million in cash from 3AC Singaporean bank accounts and file $30 million claim over Much Wow superyacht.

CoinDesk / Decrypt

2023-01-01

Leaked pitch deck reveals Zhu, Davies, and CoinFLEX founders planning a new bankruptcy claims exchange initially named GTX.

CoinDesk

2023-04-01

OPNX (Open Exchange) launches, offering spot, futures, and bankruptcy claims trading.

Decrypt

2023-08-16

Dubai's VARA fines OPNX AED 10 million ($2.7 million) and issues individual AED 200,000 reprimands to Su Zhu and Kyle Davies for operating without regulatory licenses.

Bloomberg / Arabian Business

2023-09-13

MAS issues nine-year prohibition orders against Su Zhu and Kyle Davies under Singapore's Securities and Futures Act for regulatory violations including providing false information and failing to notify MAS of a new portfolio manager.

MAS Official / CoinDesk

2023-09-29

Su Zhu arrested at Singapore's Changi Airport while attempting to leave the country, following a committal order for non-cooperation with liquidators. Sentenced to four months in prison.

TechCrunch / Bloomberg / CNBC

2023-11-01

Su Zhu transitions from prison to home detention.

CoinTelegraph

2023-12-20

Su Zhu's prison sentence ends.

SCMP / CoinTelegraph

2023-12-21

BVI court freezes over $1 billion in assets belonging to Su Zhu, Kyle Davies, and Davies' wife Kelly Chen.

CoinDesk

2024-02-14

OPNX ceases all operations and shuts down.

CoinDesk / Decrypt

model: claude-code-investigator

generated: 5/8/2026, 2:30:42 AM

last updated: 5/8/2026, 2:42:01 AM

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