Home Blockchain Two Blockchain Sleazebags May Have Crushed The Entire Crypto Market

Two Blockchain Sleazebags May Have Crushed The Entire Crypto Market

Two Blockchain Sleazebags May Have Crushed The Entire Crypto Market

The crypto market has taken more than a decademillions of experienced people and amateur investorsand some super annoying super bowl commercials to build. But according to a new report from New York magazineit may have only taken two of the skeeziest cryptbros to bring the industry to its knees, both of whom are now believed to be on the run.

Who, you ask, could these thugs be? Su Zhu and Kyle Davies, allegedly the still-missing founders of imploded crypto hedge fund Three Arrow Capital (3AC), which filed for bankruptcy last month. The pair – who are believed to be still at largeunfortunately without them stupidly titled new megayacht – over-borrowed and over-promised, all the time sweep insolvency under the rug. When the project finally collapsed, those who had loaned them millions, if not billions of dollars, did the same, which likely led to the stock market crash that caused full trillion dollars to just evaporate.

“I suspect they could be 80% of the total original contagion,” said Sam Bankman-Fried, CEO of crypto exchange FTX. NY Magazine, referring to Three Arrow’s alleged responsibility for the broader stock market crash. “They weren’t the only ones who exploded, but they did it way more than anyone else. And they had a lot more faith in the ecosystem before that.”

As NY Magazine For more details, 3AC’s success was built on two of the most fragile elements: the influence of social media and massive borrowing. Zhu notably amassed a huge following on Twitter, where he made outlandish claims about market “supercycles,” urging crypto-happy followers to keep buying — no matter what the market looked like at face value.

Really, though, the pair’s outward-looking bravado seems to have been a full front. They were borrowing huge sums of money from new investors, including $66 million from Zhu’s spouse – in order to pay old debts, and in retrospect it seems quite clear that they knew very well that their company was in fact insolvent. Which, well, is basically just a Ponzi scheme.

“The numbers they were reporting in May were very, very wrong,” said Lane Kasselman, Chief Commercial Officer of Blockchain.com. NY Magazine. “We strongly believe they committed fraud. There’s no other way to tell – it’s fraud, they lied.”

Blockchain.com, in particular, lost $270 million in unpaid loans to 3AC, and it has since laid off about a quarter of its staff. Other casualties include crypto exchange Voyager, which has since gone bankrupt and swallowed all user fundsand Genesis Global Trading, which NY Magazine said lent $2.8 billion to 3AC – a sum that will probably never be refunded.

The duo have also been accused of borrowing money from organized crime operations, which may well explain why they’re in hiding now. Uh!

So far, liquidators have only been able to recover a measly $40 million of 3AC’s one-time billions. Yet even if all the money in his wallet were somehow recovered, those billions would barely be enough to reverse the colossally destructive game of dominoes that the corporate blowout has unleashed – perhaps proving, once and for all all, that the crypto market is less Wild West and more house of cards.

“They used to brag that they could borrow as much money as they wanted,” said an unnamed trader who knew the couple in Singapore. NY Magazine. “Everything was planned, man, from how they established their credibility to how the fund was structured.”

Neither Zhu nor Davies responded to NY Magazine‘s request for comment, except for an automated email response from Davies that read “Please note that I am out of the office at the moment.”

READ MORE: The Crypto Geniuses Who Vaporized a Trillion Dollars [New York Magazine]

Learn more about the cowardice of these truly gruesome hedge honchos: Crypto Hedge Fund Founders Abandon Headquarters and Disappear After Implosion


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