Three Arrows Capital
Concentrated, leveraged bets in volatile markets with borrowed funds create cascading systemic risk.
2012 → 2022
$0 (hedge fund)
Crypto/Hedge Fund
Singapore
IdeaProof AI Failure Score
What Happened: The Timeline
2012
3AC founded by Su Zhu and Kyle Davies
2021
Peak: managing $10B+ in crypto assets
May 2022
Terra/Luna collapse wipes out major positions
Jun 2022
Defaults on $3.5B in loans, triggers industry cascade
Jul 2022
Files for bankruptcy, founders flee
Root Causes
Three Arrows Capital (3AC) was a crypto hedge fund managing over $10B at its peak. Co-founders Su Zhu and Kyle Davies made heavily leveraged directional bets on crypto assets, including a large position in Terra/Luna. When Terra collapsed, 3AC couldn't meet margin calls and defaulted on $3.5B in loans from multiple lenders. The 3AC collapse triggered a cascade of failures across crypto: Voyager, Genesis, BlockFi, and others fell like dominoes. Both founders fled Singapore and were sentenced in absentia.
Sources & References
Could This Failure Have Been Prevented?
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