SU Zhu co-founded Three Arrows Capital with Kyle Davies, a once $10 billion Singapore-based hedge fund that filed for bankruptcy in July 2022.
Three Arrows Capital, also known as 3AC, was forced into liquidation by a British Virgin Islands court after a number of trades left it unable to repay lenders.
But what is the story behind Zhu?
Who is Su Zhu?
Su Zhu was born in China before moving to the US with his family when he was 6.
Su Zhu went to Phillips Academy in Andover, Massachusetts, which is where he met Kyle Davies.
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A classmate said: “They were both known as kind of weird, but Su especially.
“In reality, they weren’t weird at all — just shy.”
While another classmate said: “Su was the smartest person in our class.”
Davies said in a podcast in 2021: “Zhu and I went to high school together, we went to college together, and we got our first job together.
“We weren’t the best of friends all the way through.
“I didn’t know him that well in high school. I knew he was a smart guy — he was like valedictorian of our class — but by college we started to hang out a lot more.”
Zhu secured a bachelor’s degree in mathematics from Columbia University in New York – graduating a year early and moved to Tokyo to trade derivatives at Credit Suisse – where Davies followed him as an intern.
They sat next to each other before Zhu was laid off in the financial crisis of 2008.
He then moved to Singapore and worked at Flow Traders.
While there, Zhu specialised in exchange-traded funds (mutual funds that are listed like stocks) and quickly became one of the firm’s most valuable employees.
He was known to criticise colleagues’ performances and even call out his managers.
Because the office was full of servers and became hot, Zhu would come to work in short shorts and a t-shirt, and even remove the shirt, leaving it off when he went through the building’s lobby.
A former colleague said: “Su would be walking around topless in his mini-shorts.
“He was the only one who’d take off his shirt and trade.”
He then had a short stint as a trader for Deutsche Bank in Hong Kong in 2012 before founding Three Arrows Capital with Kyle Davies.
The name came from a Japanese legend where a warlord teaches his sons the difference between trying to snap a single arrow which is easy and trying to break three arrows together which is impossible.
The pair were temporarily living in San Francisco, and borrowed money from their parent to scrape together about $1 million in seed funds for Three Arrows Capital.
“Both of our parents are not rich,” Davies said. “We’re very much middle-class guys.”
In less than two months, the duo had doubled their money.
They then left San Francisco and headed for Singapore, which has no capital gains tax, and by 2013, had registered the fund there with plans to become citizens.
But the pair struggled to take Three Arrows to the next level and in 2015, Davies spoke about how hard it was to raise money from investors.
During the initial stages, Three Arrows Capital focused on arbitraging emerging-market foreign-exchange derivatives which are financial products tied to the future price of smaller currencies such as the Thai baht.
BitMEX co-founder Arthur Hayes said: “When Su and Kyle told me how they got started, I was pretty impressed they had hustled their way into this lucrative market.”
But after Bitcoin reached a record high of $20,000 in late 2017, before crashing back down to $3,000, Three Arrows switched its focus to crypto.
One famous trade the pair used was known as the “kimchee premium” which meant buying Bitcoin in the US for example and then selling it at a higher price in South Korea, where the exchanges were more tightly regulated, meaning the prices were higher.
As the firm grow, it started to branch out beyond Bitcoin into start-up crypto projects and altcoins.
By the time the 2020 bull run came around, Three Arrows Capital had more than $2.6 billion in assets and $1.9 billion in liabilities.
When the bear market came in January 2022, Three Arrows Capital found itself poorly prepared and in February put $200 million into Do Kwon’s Luna, who Davies and Zhu had spent time with in Singapore.
Three Arrows then announced it would move its headquarters to Dubai.
But in May 2022 Luna collapsed to nearly zero, wiping out more than $40 billion in market cap meaning Three Arrows’ holdings in Luna, which was once around half a billion dollars, was suddenly only worth around $500.
Three Arrows started struggling to find funds to pay its lenders back and rumours the firm was collapsing filled Twitter, causing even more investors to sell their cryptocurrency.
On June 14, 2022, Zhu said: “We are in the process of communicating with relevant parties and fully committed to working this out.”
Davies then gave said he and Zhu were still “believers in crypto” but admitted, “the terra-luna situation caught us very much off guard.”
By July 2022, Three Arrows Capital had filed for Chapter 11 bankruptcy – owing more than $650 million.
Most people in the crypto sphere, from the largest lenders to wealthy investors, seemed to have lent Three Arrows Capital their assets, even their own employees, who deposited their salaries with its “borrowing desk” in exchange for interest.
What is Su Zhu’s net worth?
Prior to Three Arrows Capital being liquidated Su Zhu had an estimated net worth of $1 billion.
In September 2020, Zhu purchased a $20 million mansion in Singapore before purchasing another one in 2021 for $35 million.
In 2022, after the pair relocated Three Arrows Capital to Dubai, they purchased two villas worth around $30 million. Zhu said he had bought his new mansion from the consul of Azerbaijan
Su Zhu and Kyle Davies bought a $150 million super yacht but the pair went bankrupt the month it was set the sail, leaving the vessel without an owner in La Spezia on the Italian coast.
