Three Arrows Capital (3AC) founder, Zhu Su, is alleging FTX and Digital Currency Group (DCG) conspired a ‘criminal fraud’ against 3AC, LUNA, and STETH. DCG is the parent company of Grayscale Investments and Genesis Trading. Zhu Su says FTX and DCG conspired the fall of Terra LUNA, wiping-off $40 billion of investors’ funds in May 2022. This eventually damaged 3AC and STETH.
Sharing a summary of the DCG situation, Zhu Su tweeted:
https://twitter.com/zhusu/status/1610093549651136512
Zhu Su says 3AC’s bankruptcy following the Terra collapse led to DCG and FTX taking big losses. These losses went even beyond 3AC, leading to the bankruptcies of Babel and other GBTC-associated firms. Then, instead of cooperating in a restructuring process with 3AC, DCG fabricated a “left pocket right pocket callable promissory note” to fill the gap, per Zhu Su.
Su further states via tweets that DCG then, just like FTX, went on to “misdirect for months, using various methods to attack” 3AC. In doing so, Su says DCG “spent six months taking more deposits while insolvent.” He questions why anybody didn’t ask DCG at the time, as to “how did Genesis fill the hole.”
A bombshell tweet follows then in which Zhu Su reflects on his DCG and FTX “criminal fraud” allegation. Su says DCG’s value is 0. A “criminal fraud” is apparent. He says FTX’s Sam Bankman-Fried (SBF) was on Genesis’ board.
Zhu Su tweeted:
7) dcg value is 0, criminal fraud, ftx creditors also have case for fraudulent conveyance on Alameda returns of capital to Genesis
— 朱溯 (3/AC) (@zhusu) January 3, 2023
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)
Lastly, Su’s tweet states an eventual push by Genesis’ creditors is imminent, sealing its bankruptcy. When this happens, the remaining DCG assets would be seized. DCG creditors are paving a way for a “cashout the easy way instead of waiting for a DoJ criminal case with restitution punishments,” says Su.
In related news, an arbitration demand with the American Arbitration Association is reportedly filed against DCG and Genesis Global Capital. In the said case, law firm Silver Golub & Teitell has released a statement.
