After five weeks in hiding, the humiliated founders of Three Arrows Capital have spoken openly about the tragic demise of their once-flying hedge fund. They claimed that they had received threats to their lives and therefore went unnoticed. Su Zhu and Kyle Davies, both aged 35, claimed on Friday that Three Arrows’ calls for loans that should never have been made due to their disastrous crypto venture are now declining, according to Bloomberg.

Zhu and Davies attribute the unexpected demise of Three Arrows to their overly optimistic assumptions, with Zhu saying they positioned themselves for a market “that never materialized”.

In documents filed on July 8, counsel for the liquidators said they had not been contacted by Zhu and Davies and that the location of the firm’s founders was unknown. Zhu stated that they had no choice but to go into hiding due to death threats.

Zhu said Bloomberg‚ÄúPeople can call us foolish or misguided. And I will accept it. Maybe. But they think I stole that money in the last period when I put more of my own money in there. That’s not right.

Zhu and Davies demonstrated a systematic failure to manage risk, where the impact of bad bets was magnified by the ease with which credit was available.

The pair acknowledged that the collapse caused considerable pain, but generally avoided questions about the impact on others in the cryptocurrency ecosystem. Instead, they highlighted their significant losses while denying allegations that they had withdrawn assets from Three Arrows before it went bankrupt. According to the document, Zhu and Davies attributed the hedge fund’s demise to overexposure to Terra, a bet on Grayscale’s Ethereum and Bitcoin trust. Zhu noted that at first he could not observe any warning signs in Terry’s case.

“What we didn’t anticipate was that Luna could drop to zero in a matter of days, which would trigger an industry-wide credit crunch and put a lot of pressure on all of our illiquid assets.”

“Bitcoin went from $0 to $20,000, which was incredibly challenging for us,” Zhu said after the company was “business as usual.” That was the final nail in the coffin.”

Meanwhile, the two founders refused to reveal their current location. However, one of the lawyers involved in the discussion predicted that their eventual destination would be the United Arab Emirates, which has recently become a crypto hub.

Featured Image: Megapixl @iqoncept.

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