Download App
iOS & Android

Crypto Fraudsters Are Coming for Your Money, Again

Validated Individual Expert

Two fraudsters owing billions and two other guys that founded a now-collapsed Crypto exchange have teamed up and are back in the Crypto game.

It sounds hilarious but it’s the truth.

Needless to say, Crypto is a place where the impossible can happen, be that good or absolutely hideous, like the story we’re discussing today.

In what other industry in the world people owing billions of dollars are allowed to make a comeback and lure naive investors into their deadly game?

You’ve got to be kidding me.

Luckily, amid this utter craziness, some people in the Crypto community are already fighting back, as the damage these people have caused in Crypto is like few others, ever.

But will it be enough?

This, my friends, is the return to the limelight of some of the worst “Crypto villains” ever. And they want your money… again.

A solid track record of billions… lost

If you’ve never heard about Three Arrow Capital, or 3AC… I can assure you some Hollywood blockbusters have less action than their story.

3AC was a Crypto hedge fund that, at its peak, had $10 billion dollars of assets under management. In layman’s terms, they were managing $10 billion dollars of investors’ money in exchange for supposedly huge profits and a hefty performance fee.

At one point, Zhu Su and Kyle Davies, the protagonists of today’s article, were filthy rich.


But they lost it all last year, accumulating a $3.5 billion debt that they currently owe.

Hollywood writers, pick up your pen and paper.

Finance Hollywood, take note

Since 2018, when they became a 100% Crypto fund, everything was going amazing for 3AC. But it all went downhill on May 2022, with a huge investment of $559 million on Terra/Luna.

When Luna collapsed, that bet turned those millions into, literally, $670 dollars.


Also, they were huge backers of GBTC, Grayscale’s Bitcoin Trust shares.

This fund allows you to gain exposure to Bitcoin without having to deal with the actual asset. As trusts are closed-end funds, the number of shares is fixed (as so are the underlying assets), and these shares are tradeable in open markets.

This can create a disparity between the value of the share and the asset. In short, when times are good the shares trade at a higher value over the asset (this means that the value of your investment is higher than the market value of the underlying asset), and when times are tough it trades at a discount (loss).

With the Terra/Luna collapse, a trillion dollars were quickly eroded from the Crypto industry, and Grayscale’s premium quickly became a discount.

This resulted in huge added losses for 3AC as they closed their GBTC position to get liquidity.


And here’s where things get “smelly”.

What do irresponsible people do when their investments are very negative? You guessed it, let’s borrow some more money and gamble it all!

And that’s exactly what they did.

Because what could go wrong, right?

They borrowed huge amounts of assets from many prominent Crypto lenders and started gambling with them in open markets.

Unsurprisingly, things went south quickly, and when they did, alongside another horrible series of trades regarding staked Ether, the house of cards came crashing down.

And with it, the money of millions.

That was the end of 3AC, but things didn’t end up here.

Investing with money that’s not yours

One of the reasons Crypto is so volatile is that a great deal of Crypto investing is based on debt.

That is, people borrow money and invest it. If you succeed, your returns are far more significant. But this amplified effect also occurs when you rack up losses.

As the majority of traders lose money heavily, it’s no secret that margin investing has caused — and causes — real harm, as people have basically lost everything while attempting extremely risky bets with money they borrowed.

With money that’s not theirs.

But when you’re a multi-billion hedge fund with the capacity to borrow hundreds of millions, when you make such trades, you aren’t the only one in trouble.

Think about it this way:

  • If you take a $500k loan from a lender and you lose it, you’re doomed
  • But if you take a $500 million loan from a lender and you lose it, the lender’s doomed

If you default on your loan, that money the lender gave you isn’t going to be paid back. And this is exactly what happened in this case.

As 3AC borrowed money like a degenerate in Las Vegas’s Bellagio casino would and lost it, the fall of 3AC meant that 3AC’s creditors — the lenders 3AC borrowed from — were in serious, serious trouble.

Some didn’t make it to see the next day.

Naturally, six months later, 3AC still owes $3.5 billion.

Yes, billion.

If you’re having trouble fathoming how much money that is, that’s basically enough to give every man, woman, and child in Canada almost $100.

I repeat. To each and every one of them.

And if that isn’t enough, now these very same people that did this want to build a new Crypto company.

Because what could go wrong?

Actually, I don’t care, this isn’t about them succeeding or not, but an outcry in search of answers.

Why are they allowed?

The voice of reason

This super team of multi-billion debtors wants to create an exchange to trade not only Crypto, but stocks and Crypto claims, a market they claim — no pun intended — sits around $20 billion and it’s “up for grabs”.

The name of the exchange? GTX, which is very similar to FT… oh never mind, let’s not open that Pandora’s box, shall we?

Luckily, some in the space have made it very clear they aren’t touching this new venture with a ten-foot pole.

Wintermute says “not in a million years”

Wintermute’s CEO tweeted this yesterday:

Now, if you’re wondering who on Earth is this dude, he’s actually quite a big deal.

His company, Wintermute, is a market maker with $5 billion daily volume. Market makers are essential players in DeFi as they provide liquidity to markets, so that others, like you and me, can trade.

Luckily, it seems they have their values going before money and have been quick to separate themselves from this heinous proposal.

But I want to go a step further.

Again, why is this even allowed?

Ruining lives is free in Crypto

We’re not talking about four ordinary dudes.

These people, be that on purpose or not, have ruined the lives of thousands of people around the world.

Besides how irresponsible some investors are, especially the cases of people that invest their life savings into Crypto, there’s no denying that any of us could have fallen for the death trap these people set with their failed companies.

Maybe not with your entire savings, but it would be delusional to think that you could have predicted the demise of 3AC, which was widely regarded as an excellently-run Crypto hedge fund… when in reality they were just a bunch of degenerates gambling with other people’s money.

Again, let me remember you that Zhu Su and Kyle Davies own people $3.5 billion.

If the Canadian example wasn’t enough, here’s another one.

If you could save $100,000/year, which is impossible for 99.9999% of the global population, it would take you 35,000 years to save 3.5 billion dollars. If you could save $10,000 every single day, then it would “only” take you 959 years to save 3.5 billion.

And yet, they have the audacity to want to start fresh with yet another Crypto company.

Living with myself

I want to stretch that I’m not saying they haven’t got the right to get another chance at life, but I can easily think of millions of other options that would be much more ethically correct that returning to the same industry you once almost destroyed.

As a possible investment, I’m not going to evaluate whether GTX would be good or not. In fact, I don’t know, as I’m not a financial advisor.

But I genuinely don’t care.

My principles are simply something I’m not willing to break, and I couldn’t live with the fact I’m giving money to people who, willingly or not, have caused so much harm.

We owe it to those people that lost everything, we owe it to Crypto. If we want this industry to become a respected one, there shouldn’t be a place for these things to happen.

Become aware. Be ready

Understanding the principles and essence of Crypto allows you to cut through the noise easily and avoid regrettable decisions.

And that’s what my newsletter gives you.

However, I must warn you. If you’re looking for yet another shameless Crypto “influencer” shilling crypto dog coins to multiply your wealth by a hundred, I’m not that guy. I’m here for those that understand that true power comes from understanding the technology behind, the Blockchain.


All Comments

Recommended for you

  • Cointime April 14th News Express

    1.KuCoin: User funds are not affected2.Coinbase Pro Bitcoin wallet balance has dropped by more than 60,000 in the past 30 days3.CoinW is about to unveil a new brand logo and fully upgrade its official website4.Wintermute has transferred out 43,000 ETH from various CEXs in the past 24 hours, equivalent to about 136 million US dollars 5.A whale withdrew another 598 BTC from Binance6.Ethereum Liquidity Restaking Protocol TVL Drops to $8.06 Billion7.4 whales sold 5.68 million WIF due to market decline 8.Hong Kong Stock Exchange Spokesperson: Bitcoin and Ethereum ETFs will promptly inform the market of any new progress9.BONKbot has destroyed a total of 289.6 billion BONK 10.The whales who bought ETH at the bottom in the early morning have now sold some of their ETH

  • Cointime April 23th News Express

    1. EigenLayer: Deposit limits for all LST tokens will be removed on April 16

  • Wintermute deposited 12.08 million YGG to Kraken in the past hour, about 12.37 million US dollars

    According to on-chain analyst @ai_9684xtpa, Wintermute has cumulatively deposited 12.08 million YGG tokens to Kraken in the past hour, with a total value of $12.37 million and an average deposit price of $1.02. YGG was originally the fifth-ranked asset in Wintermute's on-chain holdings, but has fallen 18% in the past 24 hours and is now priced at $1.02.

  • Pyth Network's cumulative transaction volume has exceeded 300 billion US dollars

    Pyth Network stated in its Q1 summary report that its cumulative trading volume has exceeded 300 billion US dollars, providing services to more than 330 applications on over 55 blockchains, and currently providing real-time price information for over 500 categories of traditional and digital assets.

  • Nearly 90 million SHIB removed from circulation in the past 24 hours

    Nearly 90 million SHIB tokens were removed from circulation in the past 24 hours, and Shiba Inu's burning rate surged by 50,000%.

  • 4 whales/institutions sold 31,683 ETH worth $106 million during the market drop

    According to Lookonchain data, during the market downturn, 4 whales/institutions sold 31,683 ETH ($106 million). Cumberland deposited 17,206 ETH ($57.3 million) to the exchange. 0xC3f8 deposited 7,976 ETH ($26.6 million) to Binance. 0x1717 deposited 4,000 ETH ($13.32 million) to the exchange. Alameda/FTX deposited 2,500 ETH ($8.33 million) to #Binance.

  • USDC circulation decreased by 800 million in the past 7 days

    Circle issued 2.4 billion USDC and redeemed 3.2 billion USDC within the past 7 days, resulting in a decrease of 800 million in circulation. The total circulation of USDC is 32.1 billion US dollars, with reserves of 32.2 billion US dollars, of which 3.3 billion US dollars are in cash and the Circle Reserve Fund holds 28.9 billion US dollars.

  • Cross-chain bridge Meson Finance announces support for BEVM mainnet

    Cross-chain bridge Meson Finance announced on X platform that it now supports the BEVM mainnet, allowing users to cross-chain BTC to the BEVM mainnet from any chain supported by Meson.

  • Aptos chain transaction volume exceeded 550 million, with a monthly growth of more than 10%

    According to official data from Aptos Labs, the on-chain transaction volume of Aptos has exceeded 550 million transactions, with a monthly growth rate of over 10%. However, the active staking amount has decreased to approximately 862 million APT, and the current total supply of APT on the entire network is 1,090,635,266.

  • A whale transferred 8,500 ETH to the Beacon Depositor address through an intermediate address, worth more than $25 million

    Whale Alert has monitored that an address starting with "0x2324" transferred 8,500 ETH, equivalent to approximately $25,691,450, to the Beacon Depositor address through the intermediate address "0xf007" at around 11:05 today.