3AC Founder Says DCG and FTX Conspired For Terra Collapse, Calls Criminal Fraud

Last year witnessed some of the most dramatic collapses in the history of crypto. It all started with the first collapse of Terra’s (LUNA) ecosystem in May 2022 which eroded $40 billion of investors’ wealth in a week’s time.

The contagion spread led to an immediate collapse of the world’s largest crypto hedge fund Three Arrows Capital (3AC). Now, 3AC founder Zhu Su has come out openly blaming Digital Currency Group (DCG) – the parent firm of Grayscale Investments and Genesis Trading – behind the collapse of Terra.

In his latest Twitter thread, Zhu Su alleges that DCG along with FTX conspired for the fall of LUNa and STETH. As 3AC went bankrupt after the Terra collapse, DCG and FTX took substantial losses. The losses extended beyond 3AC with the bankruptcies of Babel and other firms that were involved in GBTC.

The 3AC founder adds that DCG could have worked along with them in the restructuring process. “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”,” he adds.

A Light on DCG’s Genesis Troubles

As we know, the collapse of FTX has led to a major liquidity crisis for DCG’s crypto lending subsidiary Genesis Global. But Zhu Su believes that Genesis was already in trouble during the Terra collapse.

He alleges that DCG and FTX took the fall of 3AC as an opportunity to “misdirect” the crypto community for months and used several methods to attack them. This is how Genesis filled the holder by taking deposits for six months following the Terra collapse, and hoping that the markets will go up. Zhu Su calls it a criminal fraud noting:

“Dcg value is 0, criminal fraud, ftx creditors also have case for fraudulent conveyance on Alameda returns of capital to Genesis 8). 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)”.

Zhu Su expects that Genesis is most likely to slip into bankruptcy in the coming days. The creditors are waiting that that Barry Silbert helps them cash out in an easy way instead of taking the DoJ route.

Zhu Su is not the first to put such blame on DCG. Last month, Terra founder Do Kwon also made similar claims.