Three Arrows Capital founder Su Zhu has alleged that Digital Currency Group had a role in LUNA’s collapse.
In a series of tweets on Tuesday, Zhu said that DCG conspired with the now-insolvent crypto exchange FTX to attack Terra’s native token LUNA and Staked Ethereum (stETH).
Here's rough summary of dcg situation
1) they conspired w FTX to attack Luna and steth and made a fair bit doing so
2) they took substantial losses in the summer from our bankruptcy as well as Babel, and other firms involved in gbtc
3) they could've calmly restructured then
— Zhu Su 朱溯 (@zhusu) January 3, 2023
Zhu alleged that DCG suffered substantial losses from Three Arrows’ bankruptcy, but covered it up with callable promissory notes that “magically filled the hole.” The 3AC founder was presumably referring to the $1.1 billion promissory note that DCG owes to its subsidiary Genesis, due in 2032.
According to Zhu, the Barry Silbert-led company employed tactics similar to FTX by allegedly misdirecting investors for months, and used various methods to attack 3AC while avoiding questions as to how it solidified its own impacted balance sheet.
Zhu said that, like FTX, Genesis spent six months taking more deposits from users while being insolvent and hoping the market would go back up.
“Most OGs are well aware of how close Barry and SBF were since beginning (SBF is on board of genesis, they gave him his first ftt backed loan),” he tweeted.
Zhu May have misplaced his allegations in this regard, seeing as former FTX CEO Sam Bankman-Fried is on the board of an Alameda-funded mining company Genesis Digital Assets and not DCG subsidiary Genesis Global Trading.
Market participants were unimpressed by Zhu’s latest stream of accusations, opining that he has continued to direct blame at other parties without taking responsibility for his own actions.
Here's a rough summary of 3ac. Still on the run, still being liquidated, still everyone else's fault.
— Thos (@thosdoteth) January 3, 2023
Zhu’s statements come a day after Gemini co-founder Cameron Winklevoss accused the DCG CEO Barry Silbert of “bad faith stall tactics.” In an open letter he made public on Twitter, Winklevoss said Silbert had dodged getting in a room with Gemini executives to resolve how best to return the $900 million Genesis owes to Gemini’s Earn users.