The two stained founders of Three Arrows Capital concluded an interview published on bloomberg on July 22, 2022, at 1:26 AM CDT.

They both gave insights about happenings around them while reflecting on past decisions of their firm.

It is a long note and let's save time for that interview. Whatever, here is the link to the interview- Three Arrows Capital Founders Break Silence.

Here is what is in the interview,  though denying allegations of pulling out money from 3AC while acknowledging wrong investment decisions they made- is centere of the whole interview.

"The whole situation is regrettable,” Davies said. “Many people lost a lot of money."

Zhu: “People may call us stupid or delusional, and I’ll accept that. But they’re gonna say that I absconded funds during the last period, where I actually put more of my personal money back in.”

Following a chain of events, you will find out how the duo explained their situation by betting on the crypto market only to be shattered.

To the effects of leverage bets, their whereabout is not publicly known. "The two declined to say where they were but one of the lawyers on the call said their ultimate destination is the United Arab Emirates, which has emerged as a hot spot for crypto." the interview confirmed.

The crypto market is undictable, nothing is risk-free and 3AC is not an exception so they had to play the odds and it all turn against them.

“We positioned ourselves for a kind of market that didn’t end up happening,” Zhu said.

“We believed in everything to the fullest,” added Davies. “We had all of our, almost all of our assets in there. And then in the good times we did the best. And then in the bad times we lost the most.”

Leveraging in a volatile market is consequential. 

“It’s not a surprise that Celsius, ourselves, these kind of firms, all have problems at the same time,” Zhu said. “We have our own capital, we have our own balance sheet, but then we also take in deposits from these lenders and then we generate yield on them. So if we’re in the business of taking in deposits and then generating yield, then that, you know, means we end up doing similar trades.”

It's no surprise that the collapse of a VC will lead to the bankruptcy of its creditors.

Creditors later on claim extravagant spending of funds which was declined by Zhu.

The boat “was bought over a year ago and commissioned to be built and to be used in Europe,” Zhu said, adding the yacht “has a full money trail.”

He rejected the perception that he enjoyed an extravagant lifestyle, noting that he biked to work and back every day and that his family “only has two homes in Singapore.” bloomberg.

“We were never seen in any clubs spending lots of money. We were never seen, you know, kind of driving Ferraris and Lamborghinis around,” Zhu said. “This kind of smearing of us, I feel, is just from a classic playbook of, you know, when this stuff happens, when funds blow up, then you know, these are kind of the headlines that people like to play.”

The lightning collapse of luna degraded 3AC while leading to a chain of liquidation to the maigre stacker.

“What we failed to realize was that Luna was capable of falling to effective zero in a matter of days and that this would catalyze a credit squeeze across the industry that would put significant pressure on all of our illiquid positions,” Zhu said.

He also traced out the relationship with Do Kwon

“We began to know Do Kwon on a personal basis as he moved to Singapore. And we just felt like the project was going to do very big things, and had already done very big things,”

They believed in the success of luna, which was a very wrong bet.

“If we could have seen that, you know, that this was now like, potentially like attackable in some ways, and that it had grown too, you know, too big, too fast.”

This seems like 3AC believe in Do Kwon and the success of Luna, only for luna to collapse.

“It was very much like a LTCM moment for us, like a Long Term Capital moment,” Zhu said.  “We had different types of trades that we all thought were good, and other people also had these trades,” Zhu said. “And then they kind of all got super marked down, super fast.”

Literally, Three Arrows Capital was more like gambling than doing business, betting on leverage only to be liquidated.

 Unfortunately Three Arrows Capital carried a series of trades like staked ETH (stETH) which ended up blowing their balance sheet due to the Terra contagion.

“Because Luna just happened, it, it was very much a contagion where people were like, OK, are there people who are also leveraged long staked Ether versus Ether who will get liquidated as the market goes down?” Zhu said. “So the whole industry kind of effectively hunted these positions, thinking that, you know, that because it could be hunted essentially.”

They also traced out, that investors were still comfortable with them after the Terra saga.

“So I just think that, you know, throughout that period, we continued to do business as usual. But then yeah, after that day, when, you know, Bitcoin went from $30,000 to $20,000, you know, that, that was extremely painful for us. And that was in, that ended up being kind of the nail in the coffin.”

Zhu and Davies admit overconfidence in the market.

“There was always an understanding of what they were getting themselves into -- this was a risky firm” “We’ve never once pitched ourselves as risk-free, like a simple yield.”

I hope is to get calm. Zhu said, “We feel that it’s just the interest for everyone if we can be physically secured and keep a low profile.” “For now, things are very fluid and the main emphasis is on aiding the recovery process for creditors.”

This is a remarkable statement as Zhu cites recovering creditors' funds. It evokes determination which is a greater endeavour in business.

It is really a great deal for the crypto community to hear from Three Arrows Capital founders as their loss impacted the whole market. It should be noted their willingness to cooperate is a great deal because millions of clients are looking up to Celsius as one of their creditors. 

To anyone reading this, I pray you recover your losses 🙏🙏🙏

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