Skip to content
Opinion
Matt Levine

Crypto Had a Credit Bubble

Three Arrows, FTX/Alameda, bribes and bonuses.

Updated on

Apparently the way it works is that if you blow up a big crypto firm, you have to sit in your home in a crypto-friendly jurisdiction giving long rambling interviews about your failures to everyone who wants to chat. Arguably this is an improvement over traditional finance, where if you blow up a financial institution you keep quiet and leave the talking to your lawyers. (“Sam Bankman-Fried Should Shut Up, Bernie Madoff’s Lawyer Says,” is a Bloomberg headline from last week.) Or perhaps it is one more case of us watching in real time as crypto re-learns the lessons of traditional finance. Maybe in six months all the busted crypto leaders will be saying “oh wow we should not have given all those interviews.” 

We have talked a lot about Sam Bankman-Fried’s rather unsatisfying Bahamas-based interviews about how he blew up FTX and Alameda Research, and we’ll talk more about them below. But here I want to start with a strangely satisfying interview that Kyle Davies gave to Hugh Hendry about Three Arrows Capital, or 3AC, the crypto trading firm that he ran with Su Zhu and that blew up over the summer. To be fair, as of this writing, I have seen only Part I of this interview, which only glances at the collapse of 3AC, so it is not fully satisfying.  But Davies gives an account of the rise of 3AC that is quite useful as just a general story of what happened in crypto over the last few years, and I want to talk about it here.