Their Crypto Company Collapsed. They Went to Bali.

June 9, 2023 12:07 PM

Many other top executives who gained wealth and status by marketing crypto to the masses have avoided serious repercussions. They had cashed out early, invested in real estate or holed up in When their hedge fund failed, a large swath of the industry was dragged down with it. The ensuing crisis drained the savings of millions of amateur investors and plunged other companies into bankruptcy. But by their own account, Mr. Davies and Mr. Zhu have been thriving. They left Singapore, where Three Arrows was based, and traveled around Asia, effectively taking the summer off. Mr. Davies started meditating. Mr. Zhu played video games and found a surf instructor. His old crypto associates were bad-mouthing him in the press, but he made new friends, a mix of surfer types and UFC fighters.
posted by SituationNormal (37 comments total)

Gift link!
posted by kimberussell at 12:30 PM on June 9, 2023 [6 favorites]

Let's not forget our friends Larry David and Matt Damon.
posted by I EAT TAPAS at 12:35 PM on June 9, 2023 [4 favorites]

The record skip, but this girl kept dancing
Prancing, grinding, grinning, romancing
I asked her to the barn, so we could hit the hay
I want to do this, Brutus, but I don't want to pay

I'm going back to Bali, Bali, Bali
I'm going back to Bali, no man I don't think so
I'm going back to Bali, Bali, Bali
I'm going back to Bali
posted by chavenet at 12:47 PM on June 9, 2023 [8 favorites]

but he made new friends, a mix of surfer types and UFC fighters.

Who he was ideally situated to meet because they were friends of or recruits from his round the clock team of bodyguards.
posted by jamjam at 1:40 PM on June 9, 2023

grifters gonna grift.
posted by lalochezia at 1:41 PM on June 9, 2023 [2 favorites]

It's almost as if the whole of cryptocurrency is a big scam. Except black tulips didn't eat huge quantities of Climate-Warming fossil fuels.
posted by theora55 at 1:53 PM on June 9, 2023 [22 favorites]

Offered without comment:

The summer after their freshman year, they traveled to Buenos Aires and set up shop in a cafe, offering to teach local workers how to play online poker and then stake them some money in return for a cut of their winnings.

But their plan to create an army of South American cardsharps had a fatal flaw: Neither of them spoke Spanish. They had wrongly assumed that working-class Argentines would understand English.

posted by mark k at 2:14 PM on June 9, 2023 [57 favorites]

"Many other top executives who gained wealth and status by marketing crypto to the masses have avoided serious repercussions. They had cashed out early, invested in real estate or holed up in "
REALLY?? I 'm shocked!! [heavy with sarcasm]
posted by robbyrobs at 3:13 PM on June 9, 2023 [6 favorites]

Given that a main selling point of cryptotokens is to enable money laundering by criminals, I'm honestly surprised that these and other Bitcoin execs haven't suffered mysterious deaths or simply been shot several times in the back, from ripping off the wrong people. Are cryptodudes really that untouchable?
posted by They sucked his brains out! at 4:57 PM on June 9, 2023 [2 favorites]

I can well imagine the ‘hedge fund’ was mismanaged; after all, the pair was trained at Credit Suisse. But, how it this any different from many other hedge funds. Skim of 10-20% in fees and, if you’re well connected like, say, LCTM, you not only get to keep your money - you may even get a government- engineered bailout.
posted by sudogeek at 5:07 PM on June 9, 2023 [2 favorites]

Death isn’t good enough.
posted by slogger at 6:18 PM on June 9, 2023 [4 favorites]

Are cryptodudes really that untouchable?

I doubt that either one of them revealed anything significant to their security arrangements to the NYT.
posted by Halloween Jack at 7:07 PM on June 9, 2023

what the hell is happening at Philips Academy that they produce multiple billionaire psychopaths??
posted by dorothyisunderwood at 7:12 PM on June 9, 2023 [3 favorites]

energy and satellites
posted by clavdivs at 7:16 PM on June 9, 2023 [1 favorite]

what the hell is happening at Philips Academy that they produce multiple billionaire psychopaths??

Is that not their job?
posted by grobstein at 7:16 PM on June 9, 2023 [38 favorites]

Tell you what though if I ripped you guys off for $100 million or whatever I would simply not talk to the New York Times about my life.
posted by grobstein at 7:18 PM on June 9, 2023 [17 favorites]

Tell you what though if I ripped you guys off for $100 million or whatever I would simply not talk to the New York Times about my life.


That's the thing, isn't it? They don't think they've done anything wrong because it's all just a game to them, and the people that lost money were just bad at playing the game.
posted by mollweide at 7:21 PM on June 9, 2023 [13 favorites]

I'm launching an investigation into grobstein for all my missing money.

Enjoy! The Cook Islands are lovely this time of year.
posted by grobstein at 7:31 PM on June 9, 2023 [3 favorites]

They can be a bit expensive if you're on the investigating side, though, I'm afraid.
posted by grobstein at 8:28 PM on June 9, 2023

... I'm just jealous.
posted by grobstein at 9:14 PM on June 9, 2023

Bitcoin execs ... Are cryptodudes really that untouchable?

The CEO of Bitcoin could not be reached for comment.
posted by neonamber at 9:58 PM on June 9, 2023 [2 favorites]

I mean yeah, in a way, this just shows what rubes most of the guys getting busted are.

Same kind of "I almost understood the rules" thing that Elizabeth Holmes had. If you stay within certain guard rails, the system will let you take a lot of money from fools and keep it. Step outside of them, and you're in trouble. See also Martin Shkreli who made all his money doing bad but legal stuff and ended up convicted for a financial manoeuvre that didn't even cost the victims any money nor make any for him but that was no permitted.

If you wanted to rook the rubes, then starting a hedge fund is legal, using money to trade on things that may or may not have been securities to the SEC is legal (vs issuing them which is not), charging high fees is legal, being bad at risk management and losing all your client's money is also legal. They may yet get these guys on a paperwork thing but the core scam they pulled isn't even against the law.
posted by atrazine at 12:35 AM on June 10, 2023 [14 favorites]

Yeah, the American financial regulatory systems really dropped the ball. Other areas haven’t done so well either, but the EU has just drafted a law on crypto that claims to offer some protection. I don’t understand why crypto wasn’t clamped down on like pyramid scams, seems pretty open and shut to me.
posted by The River Ivel at 1:14 AM on June 10, 2023

Re: the money laundering part, did the criminals actually keep their money in crypto or just use it to wash it? Cuz if they just put their money in and took it out, they wouldn’t have really lost much
posted by LizBoBiz at 2:30 AM on June 10, 2023 [1 favorite]

I don’t understand why crypto wasn’t clamped down on like pyramid scams, seems pretty open and shut to me.

Anything more complicated than grade 10 math is impossible to prosecute. Reporters can't understand it or explain it to their audience. The legislators can't understand the topic to write the laws. The investigators can't do the math to investigate. The prosecutors don't understand, the judges don't understand it and any jury smart enough to understand is also smart enough to dodge jury duty.

If you want to do crime use AP math!
posted by srboisvert at 4:53 AM on June 10, 2023 [18 favorites]

I can’t decide if I want crypto to be strictly regulated or stamped out completely. Regulation would legitimize it, and that just feels like a win for the cryptobros. Ugh.
posted by Thorzdad at 5:29 AM on June 10, 2023 [2 favorites]

I don’t understand why crypto wasn’t clamped down on like pyramid scams, seems pretty open and shut to me

Pyramid scams are not clamped down upon like you'd hope. Hence, the DeVos fortune.
posted by Selena777 at 7:37 AM on June 10, 2023 [12 favorites]

Pyramid scams are not clamped down upon like you'd hope.

Hence the rampant global inflation.
posted by neonamber at 8:47 AM on June 10, 2023 [4 favorites]

One clear evening, on a rooftop in Bali, Mr. Davies took shrooms with a group of crypto colleagues. “You look at the stars, and the stars are just, like, moving,” he recalled over dinner last month at a seafood restaurant in Barcelona, Spain, where he was vacationing with his wife and two young daughters. “You touch the grass, and it feels, like, not like normal grass.”

what a waste of shrooms.
posted by ZaphodB at 9:31 AM on June 10, 2023 [19 favorites]

Matt Damon for Crypto.com: Fortune favors the.... RETREAT.
posted by srboisvert at 9:35 AM on June 10, 2023 [1 favorite]

IMHO hoarding wealth is the real crime.

Here in Seattle, which is one of the wealthiest and most progressive places on the planet, we are currently slashing bus service, laying off special ed staff, and have thousands sleeping on the streets in the cold and rain and thousands more teetering on the brink of homelessness.

Other places have it even worse. Much, much worse.

Make it make sense.
posted by splitpeasoup at 9:54 AM on June 10, 2023 [8 favorites]

The CEO of Bitcoin could not be reached for comment.

i didn't say there is a company called Bitcoin with a CEO of Bitcoin ffs but there are executives whose companies trade Bitcoin ffs
posted by They sucked his brains out! at 5:58 PM on June 10, 2023 [2 favorites]

Anything more complicated than grade 10 math is impossible to prosecute. Reporters can't understand it or explain it to their audience. The legislators can't understand the topic to write the laws. The investigators can't do the math to investigate. The prosecutors don't understand, the judges don't understand it and any jury smart enough to understand is also smart enough to dodge jury duty.

It's not the math. You don't need to understand much of any math to, e.g., do the analysis of whether a crypto token is a security under Howey. (I can say this because I can do this analysis, and I last took math before people who are graduating from college now were born.) The financial regulatory agencies were in induced comas from 2016-2020. Federal investigations take significant time to carry out, and then there are usually settlement negotiations that drag them on longer. Hence, here we are in mid-2023 with SEC and CFTC suits against Binance and an SEC suit against Coinbase.
posted by praemunire at 6:57 PM on June 10, 2023 [4 favorites]

Taylor Swift understood that crypto tokens were unregistered securities (https://nymag.com/intelligencer/2023/04/taylor-swift-was-the-only-celeb-too-smart-to-fall-for-ftx.html).

To be perfectly clear, this is the opposite of throwing shade on Taylor Swift, who is by all accounts a shrewd businesswoman. Most actors and musicians are unfortunately the opposite, and they often have "advisors" around them whose interests do not align with the celebrity themselves.
posted by dweingart at 8:12 AM on June 11, 2023 [2 favorites]

I like that TS is more sensible than Matt Damon, admittedly a low bar.

The Singapore business paper picked the article up and ran it prominently./
posted by dorothyisunderwood at 9:54 PM on June 11, 2023

These two men are criminal con artists who engaged in breathtaking theft of billions of dollars from thousands of individual investors

It was a hedge fund, so these individual investors, at least the U.S. ones, would have needed a net worth of $1m (excluding principal residence) or income of over $200K/yr. for singles or $300K for married. (Notice how, to find a sympathetic victim, they had to go upstream to someone [*] caught up with a creditor which then went bankrupt.) The group they really screwed over was their creditors, also businesses for the most part.

The article wasn't great for my blood pressure, either (and it also seems quite possible that they broke other, non-investor-facing, laws in the process), but it's important to understand how this stuff works.

[*] Notably, someone who decided to put his apparent nest egg into lending in a highly speculative "industry" but likely thinks that there's too much regulation in this country.
posted by praemunire at 7:45 AM on June 12, 2023 [1 favorite]

The way incidentally that 3AC worked is they borrowed their money from crypto "lending platforms" so if you wondered, as I did, who was paying the high interest rates to justify all those 15% lending returns, that's who. Borrow loads of non-recourse money, invest, if market goes up you pay it back, otherwise - oopsy.

So Celsius and Voyager lent them all this money and then when crypto token prices went down and they lost money, they closed down the fund. I don't know that they actually took much outside investment capital. So that's where the money from the suckers in the general public came in, through these lending platforms.
posted by atrazine at 7:01 AM on June 14, 2023 [1 favorite]