The co-founder of bankrupt crypto hedge fund Three Arrows Capital (3AC) has launched a flurry of accusations despite facing legal scrutiny of his own.
Zhu Su claims that the Digital Currency Group (DCG) “conspired with FTX to attack LUNA,” the native algorithmic stablecoin of Terra, that collapsed in May 2022.
“They took substantial losses in the summer from our bankruptcy as well as Babel, and other firms involved in GBTC. They could’ve calmly restructured then. Instead, they fabricated a left pocket right pocket callable promissory note that magically filled the hole. This is like a kid losing at poker and saying ‘I am fine, my dad will pay you, let me keep playing,’ but if your dad is actually yourself.
They, like FTX, proceeded to misdirect for months, using various methods to attack us and also not have anyone ask the hard questions which is how did Genesis fill the hole. They, like FTX, spent six months taking more deposits while insolvent and hoping [market] goes up.”
3AC is reportedly facing legal scrutiny of its own, with the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) looking into the possibility that the company committed violations for failing to register with the agencies and misleading investors about the state of its finances. The embattled firm went bankrupt in July.
Digital Currency Group faces liquidity issues after one of its subsidiaries, crypto lender Genesis, suspended withdrawals due to the bankruptcies that hit the crypto industry last year.
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