Three Arrows Capital (commonly known as 3AC) was a Singapore-based cryptocurrency hedge fund founded in 2012 by Su Zhu and Kyle Davies. Starting as a forex trading operation, the firm gradually shifted focus to digital assets and by 2021 had grown into one of the largest crypto-native funds in the world, with assets under management reportedly reaching $18 billion at peak in early 2022. 3AC was among the earliest institutional-scale players to bet heavily on a multi-year crypto bull market, making concentrated bets across layer-1 blockchains, DeFi protocols, and NFT infrastructure.
The fund operated largely through borrowed capital, taking leveraged positions across major exchanges and lending desks including Genesis, Voyager Digital, and BlockFi. Su Zhu was publicly associated with the "supercycle" thesis – a view that crypto adoption would drive sustained price appreciation unlike previous cycles. This thesis shaped the fund's risk posture heading into 2022.
Notable investments
- Solana (SOL) – early-stage investment in 2020–2021; 3AC accumulated a significant position before SOL's rise to top-5 by market cap
- Avalanche (AVAX) – participated in early funding rounds for Ava Labs
- Near Protocol (NEAR) – early backer of the sharded layer-1 blockchain
- StarkWare – invested in the Ethereum ZK-rollup developer before its $8 billion valuation round
- Axie Infinity (AXS) – held positions in the play-to-earn game that peaked in late 2021
- Deribit – acquired approximately 25% stake in the crypto options exchange; later sold
- Aave – held governance token positions in the DeFi lending protocol
- Terra/LUNA – held a large position in the Terra ecosystem; this proved catastrophic
- Grayscale Bitcoin Trust (GBTC) – accumulated hundreds of millions in GBTC shares, later illiquid at a discount
Team
Su Zhu (Co-Founder and CIO) grew up partly in the United States and graduated from Columbia University. He worked as a trader at Credit Suisse in Tokyo before co-founding 3AC. Zhu became one of the most prominent voices in crypto Twitter, known for macro analysis and directional calls. Kyle Davies (Co-Founder) also attended Columbia University and worked at Credit Suisse alongside Zhu. Davies handled investor relations and operational management. Both founders had traditional finance backgrounds, which informed the fund's early macro-driven approach before its pivot to concentrated crypto venture bets.
Collapse and legal aftermath
In May 2022, the Terra/LUNA ecosystem collapsed within days, wiping out billions in value. 3AC had borrowed heavily using LUNA and GBTC as collateral. Margin calls cascaded across the industry. By June 2022, lenders including Voyager Digital and Genesis were unable to recover hundreds of millions in loans. On 27 June 2022, 3AC filed for Chapter 15 bankruptcy in the United States. A British Virgin Islands court separately ordered the fund's liquidation. Liquidators from Teneo estimated total creditor claims exceeded $3.5 billion.
Su Zhu was arrested at Singapore's Changi Airport in September 2023 and sentenced to four months in prison for obstructing court-appointed liquidators. Kyle Davies evaded Singapore authorities and his whereabouts remained unclear through most of 2023. Both founders launched Open Exchange (GTX) in early 2023 – a platform to trade bankruptcy claims – which attracted significant criticism from creditors. Coverage of the legal proceedings is documented at CoinDesk and in court filings via Teneo's liquidation portal.
Legacy and broader impact
Three Arrows Capital's collapse became a defining event of the 2022 crypto bear market. Its failure directly contributed to the insolvency of Voyager Digital, the near-collapse of Genesis, and broader contagion across crypto lending. The fund's history is now studied as a case in counterparty risk, leverage concentration, and the limits of the supercycle thesis. Its early-stage bets on Solana, Avalanche, and StarkWare were genuinely prescient – the execution of risk management was not. 3AC is no longer an active investment entity. All operations are controlled by court-appointed liquidators pursuing asset recovery for creditors.
