Three Arrows Capital founder accused DCG of conspiring with FTX to attack LUNA

What’s new? Su Zhu, the founder of the bankrupt hedge fund Three Arrows Capital (3AC), explained what is going on with Barry Silbert’s Digital Currency Group (DCG). He said that DCG conspired with the failed FTX exchange to attack the token of the Terra (LUNA) blockchain ecosystem. In addition, Zhu added that the companies suffered significant losses from the bankruptcy of 3AC, as well as Babel and other firms affiliated with Grayscale Bitcoin Trust (GBTC) of the digital asset management company Grayscale (part of DCG along with Genesis).

Here's rough summary of dcg situation1) they conspired w FTX to attack Luna and steth and made a fair bit doing so2) they took substantial losses in the summer from our bankruptcy as well as Babel, and other firms involved in gbtc3) they could've calmly restructured then

— Zhu Su 🔺 (@zhusu) January 3, 2023

What else did Zhu state? The founder of 3AC noted that DCG could have restructured calmly after the bankruptcies of firms associated with GBTC. However, according to Zhu, “ instead they fabricated a left pocket right pocket callable promissory note that magically filled the hole [in the budget].”

Zhu writes that DCG, like FTX, continued to mislead the community for months, using various methods to attack 3AC and prevent anyone from asking hard questions about how the Genesis broker solved the budget problems. He added that DCG, like FTX, spent six months taking new deposits, being insolvent, and hoping the market would go up.

Zhu also said that DCG is worth $0 and emphasized that Barry Silbert and former FTX CEO Sam Bankman-Fried were close since the latter was on the board of Genesis.

Zhu believes that Genesis creditors will drive the company into bankruptcy and take DCG’s remaining assets in the coming days. In any case, “they are likely demanding Barry pays back his cashouts the easy way instead of waiting for a DoJ criminal case with restitution punishments.”

In November, Su Zhu said that FTX’s bankruptcy set the crypto industry back seven or eight years. In December, the New York prosecutor’s office opened an investigation into Bankman-Fried and FTX’s involvement in Terra’s collapse.

That same month, crypto exchange Bitvavo said it had liquidity problems with DCG and was unable to withdraw its funds from the company’s services. And Cameron Winklevoss, co-founder of crypto exchange Gemini, published an open letter to Silbert in which he recalled DCG’s $900 million debt to his platform. In addition, hedge fund Fir Tree Capital Management sued Grayscale for details about GBTC and to investigate potential conflicts of interest and mismanagement. Grayscale later allowed the possibility of the sale of up to 20% of GBTC shares.