Zhu Su, CEO of the defunct hedge fund Three Arrow Capital or 3AC, has taken to Twitter to pin blame on venture capital firm Digital Currency Group [DCG] and FTX for Terra’s fallout.
In the series of tweets, the co-founder of the Singapore-based firm alleged that DCG and FTX hatched an elaborate plan to attack Terra’s native token LUNA, and Lido’s stETH.
It is worthwhile to mention that Three Arrows was the first major crypto firm to go bankrupt in 2022, brought down by the collapse of cryptocurrencies Luna and TerraUSD in May. It filed for bankruptcy in the British Virgin Islands in late June 2022.
According to Zhu Su, DCG and FTX suffered severe losses during that time. With the collapse of Babel and other crypto firms involved in Grayscale’s GBTC, the losses went beyond 3AC.
For those new, DCG is the parent firm of Grayscale Investments and Genesis Trading. FTX’s recent crash triggered a major liquidity crisis for DCG’s crypto lending subsidiary Genesis Global.
According to the CEO, DCG could have supported the hapless firms in the restructuring process but instead chose to “fabricate a left pocket right pocket callable promissory note that magically filled the hole.”
“This is like a kid losing at poker and saying “I am fine, my dad will pay you, let me keep playing”, he tweeted.
“DCG’s Value Is Criminal Fraud”- 3AC Founder
Zhu Su also alleged that DCG and FTX had been attacking them for months and had taken advantage of 3AC’s fall to “misdirect” the crypto community.
They, like FTX, proceeded to misdirect for months, using various methods to attack us and also not have anyone ask the hard questions which is how did genesis fill the hole. they, like FTX, spent six months taking more deposits while insolvent and hoping mkt goes up.
The 3AC founder then likened DCG’s efforts to criminal fraud and criticized its CEO, Barry Silbert, for approving SBF his FTT-backed loan.
Further, the founder predicted that Genesis would likely be the next to file bankruptcy in the near future. “…they are likely demanding Barry pays back his cashouts the easy way instead of waiting for a DoJ criminal case with restitution punishments,” he stated.
“The damage from yield generator fund blow-ups could have been contained by client-facing firms doing proper restructurings that, while painful for equity holders, would’ve ensured continuity Instead, FTX and DCG committed umpteen frauds to risk client funds rather than dilute”, the 3AC founder concluded.