belonging to another cryptocurrency mogul, Su Zhu was basking in the aura of his power and influence as he nursed a 21-year-old whiskey at a “crypto insiders” party.Surrounded by hangers-on trying to pitch him their latest project, Zhu largely ignored the cacophony of voices that were droning around him as he sipped his drink.
Even by late 2021, when Pantera Capital had sold most of its stake in Terra Luna, Zhu was busy buying, not Luna, but real estate., Zhu was shopping around for another Good Class Bungalow, Singapore’s most exclusive form of housing located in its toniest districts, to find an abode befitting his stature near the top of the crypto world.
Nevertheless, plenty of people held Zhu and 3AC in high regard, especially given that Zhu had correctly predicted the end of the “Crypto Winter” in 2018 and that Bitcoin would break its all-time-high in 2020. Just days before Bitcoin slipped below US$40,000, and two months before 3AC would file for bankruptcy, Zhu, in his characteristic deadpan, declared at a podcast recording for cryptocurrency exchange FTX,Yet the despair in financial markets in general and the cryptocurrency markets in particular was not unwarranted.
A venture investor in some of the best-known cryptocurrency startups, in many cases, 3AC also served as a manager of their corporate treasuries, which helped it to circumvent the regulatory restrictions of its Registered Fund Management Company license.As early as 2013, 3AC held an RFMC, a type of fund management license administered and governed by the Monetary Authority of Singapore , but which came with specific restrictions that few investors were aware of.
However, 3AC had not applied for any fund management license in Dubai nor notified regulators in the United Arab Emirates of its intention to do so. In May this year, 3AC attempted to plug the hole caused by the collapse of Terra Luna, soaking up some US$559.6 million worth of Locked Luna tokens, a stake which would be worth around US$600 by late June, and go on to become worthless.
Some have speculated that Zhu and Davies may have engaged in “revenge trading” where a trader borrows even more money to trade their way out more quickly of a hole they’ve dug themselves in by using leverage. It has now surfaced that BlockFi and BitMEX have exposure to 3AC as well and the list of affected counterparties reads like a who’s who of the crypto world, including Cumberland DRW, Galaxy Digital and crypto options exchange Deribit.