Kyle Davies, who helped create Three Arrows Capital (3AC), was once a trader at Credit Suisse. He controlled a crypto hedge fund that suddenly collapsed last year, leaving a $3.5 billion debt. Because of his willingness to take big risks and direct style, Davies, together with Su Zhu, rose to fame in the crypto world until the overleveraged bets on Terra Luna resulted in the bankruptcy of 3AC. Because of asset freezes and lawsuits, Roman Abramovich’s estimated net worth of $1 billion has almost vanished. With the threat of prison in Singapore, Davies is trying out OPNX and OX.FUN, causing some people to start discussing these projects. The author examines how 3AC collapsed and looks at what Su has done in the crypto realm since then.
Three Arrows Capital’s path from success to failure
Davies and Su Zhu launched 3AC in 2012, but after a few years of foreign exchange arbitrage they changed their focus to crypto. In 2021, 3AC managed as much as $10 billion and had invested in Bitcoin, Ethereum, Solana and DeFi projects like Aave, according to Bloomberg. By holding 5.6% of Grayscale Bitcoin Trust, valued at $2.1 billion in 2021 and an additional $200 million in Luna in 2022, they clearly showed they were following an aggressive approach. The January 2022 tweet from Davies, where they said they would ‘burn all their bridges’ for crypto, showed their very high-risk attitude that paid off tremendously at its highest point.
The collapse of the May 2022 Terra Luna and TerraUSD wiped out all of 3AC’s holdings, reported Cointelegraph, showing that a $560 million Luna position was reduced to just $1,000. Because it did not pay back a $665 million Voyager Digital loan, 3AC was forced to sell off holdings, at least some of which went to BlockFi as lenders. On June 27, 2022, a British Virgin Islands court agreed to liquidate the company because creditors say they are owed $3.5 billion. Davies and Zhu were accused of being uncooperative and then went into hiding, with stories suggesting Davies might be in Bali or Dubai. Credit creditors had been misled by the Madoff group when they claimed in May 2022 that assets were worth $2.4 billion, according to New York Magazine.
Taking Net Worth and Assets
At the height of its operations, Forbes estimated that Davies was worth $1 billion after adding his crypto assets, $30 million Singapore home and his $50 million yacht, Much Wow. In just a few days by 2025, people close to 30m unemployed and with liquidators collecting $1.1 billion and seizing his boat and other digital assets, per CoinDesk. In December 2023, court orders prevented Davies, Zhu and Davies’ wife, Kelly Chen, from using their assets, increasing the chance for creditors to reclaim more than $3.3 billion. The crime blogging organization The Verge pointed out that routing $32 million through the Cayman Islands was one of the reasons David Davis may have been accused of fraud.
He used to hold 223,000 ETH and many Bitcoin, but part of them were liquidated and he faced lawsuits, causing his portfolio to shrink. By renouncing his United States citizenship, claiming Singapore as his residency, Davies hoped to escape the reach of U.S. law, according to Decrypt. The financial sector ban in Singapore which lasted nine years and lawsuits, including a $1.3 billion demand from liquidators, are costing him financially. At the time of the 2024 Unchained Podcast, it became apparent he does not show regret, possibly infuriating those who feel owed money.
Ventures and Controversies That Followed the Fall
When 3AC failed, Davies and Zhu started Open Exchange (OPNX) in 2023 to help handle the trading of bankrupt crypto claims from Hong Kong. It dealt with strict financial penalties in Dubai and then ceased operations in February 2024, according to Wikipedia. In 2024, they advised OX.FUN, a platform that gamifies trading and backed Three Arrowz Capitel ($3AC), a memecoin that critics say has an insider-dominated supply, according to CoinDesk. Davies’ recent statement that his crypto firm collapses like others and doesn’t regret it and his effort to escape a Singapore prison for four months like Zhu, have met with anger from X users, who hailed Zhu’s detention in response.
Davies is being sued for $1.3 billion by Terraform Labs and accused of fraudulently claiming that 3AC had enough money to avoid bankruptcy. Despite his claim to CoinDesk that he had no pending lawsuits, liquidators claimed he had not been cooperative, according to Reuters. Reports in 2023 of a sighting in Bali by @RichQuack and his admission during a podcast chat in 2024 from Europe revealed his desire to get away from Singapore’s laws. Last year, his explanation of 3AC’s collapse by blaming FTX was seen by liquidators as simple deflection, CNBC reported.
Changes for the Crypto Industry
After 3AC collapsed, the company’s failure helped lead Voyager Digital into bankruptcy and saw layoffs at Blockchain.com, as per Wikipedia. Estimates from Wikipedia state that Sam Bankman-Fried believes 3AC was responsible for around 80% of the $1 trillion loss in the market. The crisis made it clear that too much borrowing and lack of rules resulted in greater accountability, as shown by Singapore’s Monetary Authority fine on 3AC for overstepping its $250 million asset limit. As per @WhaleCoinTalk, Davies’ unyielding nature decreased trust in the company, as liquidators pressed for answers on behalf of creditors, noted Blockonomi.
Because of the fallout, decentralized finance grew, but Davies’ new projects have to answer tough questions thanks to 3AC’s reputation. OPNX’s launch was mentioned as proof of his unchanged reputation, but most were surprised, since X posts since 2024 accused FOC of being uninterested and peaceful, according to The New York Times. Because the Much Wow boat is and continues to be, online fodder for fun, it symbolizes Trump’s downfall, reports New York Magazine.
The Road We Are Sharing
The way forward for Davies depends on any legal decisions and how well he reinvents himself. With $1.3 billion demanded and a ban in Singapore, OX.FUN and $3AC memecoin struggle to be seen as credible. Although his words on the podcast suggest that he is unbending, liquidator efforts to recover $3.3 billion put him in a tough position. Even as cryptocurrency becomes subject to tighter authority, the story of Davies makes clear the dangers of acting with greed, so his story is now mostly about bringing 3AC to its end.
FAQs
1. What exactly did Kyle Davies do at Three Arrows Capital?
He helped launch 3AC and guided their strategy in making crypto investments until it declared bankruptcy in 2022.
2. Why did 3AC fail?
The loss of $560 million from the 2022 Terra Luna crash, a $665 million loan default and new creditor claims totaling $3.5 billion resulted from the crash.
3. How much is Davies’ net worth in the year 2025?
Before, his net worth was $1 billion, but after a $1.1 billion freeze and penalties, it is almost nothing.
4. For what reason is Davies threatened with being sent to jail?
He might face four months in Singapore if he does not cooperate with the liquidators of 3AC.
5. What kind of crypto businesses is Davies working on?
He played a part in forming OPNX (closed down in 2024), gave guidance to OX.FUN and funded $3AC memecoin, all bumping into criticism.
