The co-founder of 3AC claims that DCG and FTX conspired against Terra LUNA and stETH. Zhu has also claimed that DCG is worthless, as Genesis creditors will force it into bankruptcy in the near future.
Bankruptcy War
The co-founder of bankrupt financial firm Three Arrows Capital, Zhu Su, made accusations that Digital Currency Group (DCG) and FTX conspired to attack Terra LUNA and stETH in a Twitter thread on Jan. 3.
Here's rough summary of dcg situation
1) they conspired w FTX to attack Luna and steth and made a fair bit doing so
2) they took substantial losses in the summer from our bankruptcy as well as Babel, and other firms involved in gbtc
3) they could've calmly restructured then
— Zhu Su 🔺 (@zhusu) January 3, 2023
The tweet begins by summarizing the DCG situation, stating that they conspired with FTX to attack Luna and stETH, and they made quite a bit of profit from doing so. Moreover, he claims they have experienced substantial losses in the past few months due to the bankruptcy of 3AC, Babel, and other firms that were a part of GBTC during the summer.
According to Zhu, those companies could’ve calmly restructured at the time. The bankers, however, came up with the idea of fabricating a left pocket callable promissory note that magically filled the hole.
In the allegation, it continues to be said that DCG, like FTX, used a variety of methods to attack 3AC during the months that followed, and no one asked the hard questions, such as how did Genesis fill the gap left of 3AC?
In the thread, the most significant claim is that Zhu claims the DCG valuation is zero. This is criminal fraud, while FTX creditors also claim that Alameda returned capital to Genesis by fraudulent conveyance.
7) 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 🔺 (@zhusu) January 3, 2023
According to him, Genesis creditors are likely to push DCG into bankruptcy and take other DCG assets as soon as possible; regardless, it is likely they will be asking Barry to repay his cashouts in the easiest possible way rather than waiting for a criminal case to unfold with restitution punishments from the DoJ.
It shows a new era in the cryptocurrency industry when a co-founder of a bankrupt crypto company alleges that others have influenced companies and the market over the years. It appears that there are real problems between the companies, regardless of what Zhu Su may claim.
On the other hand, it’s not the first time that tech companies have been accused of transgressions against each other. Nevertheless, there is a chance that they will be reacted to by the market. Crypto companies may lose some trust from investors, and some of them may migrate over to decentralized solutions, a goal that crypto industry hopes to achieve in the future.
