Su Zhu, the man of Three Arrows Capital, had gone silent on social media when his crypto hedge fund failed earlier this year. That is, until the crypto sector was shaken by an even bigger and more disastrous occurrence, the demise of the Bahamas-based FTX.
The 35-year-old, who previously ran the world’s largest crypto hedge fund and controlled billions of dollars, is now a fugitive who has been evading authorities. However, the demise of FTX appears to have provided him with the ideal opportunity to defend his actions and share his thoughts on the current state of the crypto industry.
Blame game goes on
Zhu took to Twitter recently to give his opinions on how the crypto industry can recover from the damage dealt by FTX’s collapse. Ironically, the collapse itself was a domino effect of his own hedge fund’s questionable business practices.
In a first, he acknowledged the role that Three Arrows Capital played in the crypto contagion earlier this year. However, Zhu took this opportunity to try and defend his actions, outlining how the decisions made by entities other than 3AC affected their business activities.
“In early spring we returned billions of loans in one go, which then led lenders to panic (as they borrow fixed from clients) and beg us to take them again (we) were lulled into a sense of infinite backstop.”
Regulation and self-custody will speed up recovery
Zhu believes that CeFi yields products, which have been involved in various controversies including the bankruptcies of the Celsius Network and Voyager Digital.
According to him, insider trading is a chronic problem in the industry and needs to be fixed through regulations. Regulations should also address the conflict of interest that arises at crypto firms, especially in the dealing made with associated entities.
Zhu has also recommended increased transparency in centralized exchanges and greater adoption of DeFi paired with self-custody in order to expedite the recovery of the crypto industry.
He further added that the new generation of investors and builders needs to focus less on ponzinomics and focus more on decentralization to create permanently valuable communities.
Zhu hints at the launch of a hybrid fund
In an interview with Bloomberg yesterday (22 November), Su Zhu indicated that in the months following 3AC’s collapse he has been doing a lot of thinking, including the possibility of launching an “all-weather” fund. This new fund would invest in both crypto as well as traditional assets.
Zhu added that there is no rush to launch this new fund. He has indicated it’s just the beginning and that the contagion has yet more victims to claim.