THE NEW YORK TIMES
Their Crypto Company Collapsed. They Went to Bali.
The implosion of Three Arrows Capital,
a cryptocurrency hedge fund, devastated
the industry. Its two founders spent the
next year surfing, meditating and traveling
the world.
Not long after his cryptocurrency hedge fund collapsed last year, spawning a market meltdown that devastated the industry, Kyle Davies got on a plane and left his troubles behind.
He flew to Bali. As his company was liquidated and law enforcement authorities opened investigations on two continents, Mr. Davies spent his days painting in cafes and reading Hemingway on the beach.
He also went sightseeing. He traveled in Thailand, where the fried oysters cost only a few dollars, and admired the local architecture in Malaysia. He posted a photo from a private zoo in Dubai, showing him stroking a tiger chained to a pole. In Bahrain,
he attended a Formula 1 event in the run-up to the Grand Prix.
One clear evening, on a rooftop in Bali, Mr. Davies took shrooms with a group of crypto colleagues. “You look at the stars, and the stars are just, like, moving,” he recalled over dinner last month at a seafood restaurant in Barcelona, Spain, where
he was vacationing with his wife and two young daughters. “You touch the grass, and it feels, like, not like normal grass.”
Life as a crypto industry pariah, it turned out, wasn’t so bad.
A year ago, Three Arrows Capital, the hedge fund founded by Mr. Davies and Su Zhu, both now 36, imploded almost overnight. Worshiped by their hundreds of thousands of Twitter followers, Mr. Davies and Mr. Zhu had been crypto superstars, known for their
trading acumen and bold predictions about the market. They were fixtures on the crypto podcast circuit whose influence allowed them to borrow hundreds of millions of dollars from leading firms and make big bets on the future of the industry.
When their hedge fund failed, a large swath of the industry was dragged down with it. The ensuing crisis drained the savings of millions of amateur investors and plunged other companies into bankruptcy.
But by their own account, Mr. Davies and Mr. Zhu have been thriving. They left Singapore, where Three Arrows was based, and traveled around Asia, effectively taking the summer off. Mr. Davies started meditating. Mr. Zhu played video games and found a
surf instructor. His old crypto associates were bad-mouthing him in the press, but he made new friends, a mix of surfer types and UFC fighters.
“They had a lot of empathy and sympathy for me,” Mr. Zhu said from his luxury home in Singapore. “They get defeated in a big fight, lose sponsorships or whatever, and everyone’s crying. But then the fighter himself — his mind has already passed
to the next fight.”
After the crypto industry crashed last year, erasing more than $1 trillion from the market, some of the business’s leading figures were held to account. Changpeng Zhao, the chief executive of Binance, the world’s largest crypto exchange, is under
criminal investigation and facing a lawsuit from the Securities and Exchange Commission. Sam Bankman-Fried, the founder of the FTX exchange, is under house arrest at his childhood home in Palo Alto, Calif., awaiting trial on fraud charges. Do Kwon, the
South Korean entrepreneur who created the failed Luna cryptocurrency, was apprehended in Montenegro this spring after dodging the authorities for months.
Yet many other top executives who gained wealth and status by marketing crypto to the masses have avoided serious repercussions. They had cashed out early, invested in real estate or holed up in tax havens.
The Three Arrows founders are two of the most prominent examples. They are still living comfortably, after managing a fund that oversaw more than $4 billion at its peak. Mr. Davies and Mr. Zhu declined to provide an estimate of their total wealth, but
said they had saved enough over the years that they didn’t need to work again.
Neither was willing to apologize for the collapse. Three Arrows owes its creditors $3.3 billion; the firm was registered in the British Virgin Islands, and its court-appointed liquidators there claim that Mr. Davies and Mr. Zhu have refused to cooperate
in the recovery process. In October, Bloomberg reported that federal regulators in the United States were investigating whether Mr. Davies and Mr. Zhu had misrepresented their finances to Three Arrows investors.
Mr. Davies and Mr. Zhu maintain that they did nothing wrong. They said they had faced death threats, but pointed out that no government agency had sued them or sought their arrests.
A friend recently asked Mr. Davies whether he felt any remorse. “Remorse for what?” he said he had replied.
For the past few months, Mr. Davies and Mr. Zhu have been planning a comeback. In April, they unveiled Open Exchange, a marketplace for traders who lost money in last year’s crypto implosions. Customers will be able to buy and sell claims to the
bankruptcy estates of defunct crypto firms like FTX and possibly Three Arrows itself.
In pitch documents sent to investors in January, Mr. Davies and Mr. Zhu code-named their new company “GTX,” an alphabetical successor to Mr. Bankman-Fried’s failed exchange.
For the rest of the story, contact PopInFart and ask him how much he lost… Or:
https://www.nytimes.com/2023/06/09/technology/three-arrows-cryto-bali.html
Oh, wait, he said our economy is collapsing and the dollar is worth nothing.
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