Su Zhu's Fall: How Leverage Destroyed a Billion-Dollar Fund

In September 2023, Su Zhu was arrested at Singapore Changi Airport while attempting to flee with a fake passport. What had once seemed impossible suddenly became reality: the man who had commanded over $3 billion in crypto assets was now facing up to 10 years in prison. The mansion worth $50 million was seized, the NFT collection that once symbolized his wealth became worthless, and the reputation he spent years building evaporated in days. But how did we get here? The answer lies not in bad luck, but in a fundamental failure to understand risk.

Su Zhu’s Humble Beginnings: From Deutsche Bank Trader to Crypto Stardom

Su Zhu was not born into crypto royalty. In 2012, the Singapore entrepreneur was an ordinary trader at Deutsche Bank, earning a modest salary and doing what millions of others do every day. But Su Zhu harbored different ambitions. By the early 2020s, he had co-founded Three Arrows Capital (3AC) with colleague Kyle Davies, and the firm quickly became one of the most talked-about hedge funds in the cryptocurrency space.

Su Zhu’s rise was meteoric. Where traditional finance moved cautiously, Su Zhu moved aggressively. His bold trading strategies and willingness to take calculated risks earned him admirers throughout the industry. Media outlets painted him as a crypto visionary, and younger traders tried to mimic his every move. By 2021, the name Three Arrows Capital was synonymous with winning in crypto markets. But beneath the glamorous exterior, a dangerous machine was being built.

The Secret Ingredient: How Su Zhu Built His Empire on Borrowed Money

Su Zhu’s actual secret was not innovation or insight—it was leverage. Three Arrows Capital operated as what could only be described as a borrowing machine. The company had lines of credit from BlockFi, Voyager, Genesis, and numerous other lenders. The strategy was simple but perilous: borrow money at a certain rate, invest it at higher returns, and pocket the difference. Then borrow more and repeat.

What made this particularly reckless was where the borrowed capital was deployed. Su Zhu didn’t just invest in established cryptocurrencies. He made multi-million-dollar purchases of NFTs that had little fundamental value beyond scarcity. He publicly discussed a “super cycle” in crypto while spending lavishly on digital assets that only made sense if the market continued climbing indefinitely.

The structure of Three Arrows Capital became increasingly fragile. Su Zhu controlled billions in assets belonging to other wealthy investors, wealthy families, and other hedge funds. These stakeholders trusted him because his track record appeared flawless. In reality, their money was being used as collateral in an increasingly complex web of loans and leveraged positions. A single significant downturn would expose the entire structure as hollow.

When the House of Cards Falls: The May 2022 Crisis

The first domino fell in May 2022 when Terra’s LUNA token collapsed. Three Arrows Capital had invested approximately $500 million in the LUNA ecosystem. Within days, that investment became worthless. The $500 million wasn’t Su Zhu’s money—it was borrowed funds that now had to be repaid from a shrinking pool of assets.

What followed was a cascading series of margin calls. Imagine this scenario: you borrowed $1 billion using $2 billion in crypto assets as collateral. When the value of those assets drops by 50%, your debt position becomes unsustainable. Your lenders demand their money back immediately. You have no cash and your collateral is worth half what it once was. This was the trap that Su Zhu found himself in.

The crypto market continued to decline, and Bitcoin fell alongside other digital assets. Three Arrows Capital’s highly leveraged positions became increasingly untenable. Creditors from BlockFi, Voyager, Genesis, and other lending platforms began calling, demanding repayment. The company that had seemed untouchable was suddenly insolvent with an estimated $3.5 billion shortfall.

The Disappearing Act: From CEO to Fugitive

As creditors circled, Su Zhu did something that would ultimately seal his fate—he disappeared. He stopped answering calls, ceased communication with business partners, and cut off contact with the investors whose money he had been managing. He wasn’t facing the crisis head-on like a responsible fund manager would. Instead, Su Zhu boarded a flight to Dubai and continued living a luxurious lifestyle, apparently hoping the crisis would somehow resolve itself.

For over a year, Su Zhu remained a fugitive. The ripple effects of Three Arrows Capital’s collapse spread throughout the crypto industry. BlockFi filed for bankruptcy, Voyager Digital filed for bankruptcy, and Genesis halted customer withdrawals. Thousands of retail investors lost their life savings. The damage extended far beyond Su Zhu’s own fund—it exposed systemic risks in the crypto lending market and shattered confidence in supposedly trustworthy platforms.

Then in September 2023, Su Zhu’s plan to escape caught up with him. Attempting to board a flight out of Singapore Changi Airport with forged travel documents, he was apprehended by authorities. The man who had lived in a $50 million mansion and collected expensive NFTs was now facing criminal charges that could result in a decade behind bars.

The Aftermath and Market Fallout

The collapse of Three Arrows Capital and Su Zhu’s subsequent arrest became one of the most significant cautionary tales in cryptocurrency history. Multiple lending platforms that had extended credit to 3AC went under, creating a domino effect that wiped billions in value from the market. Investors who had trusted these platforms with their coins lost access to their funds, and in many cases, those funds were simply gone.

Su Zhu’s arrest sent a message: even the most successful and celebrated figures in crypto are not above the law, and the appearance of success built on leverage is no guarantee of actual financial health. The trial and potential conviction of a high-profile industry figure added regulatory scrutiny to an already embattled sector.

The Lessons That Su Zhu’s Story Teaches

Looking at Su Zhu’s trajectory from crypto celebrity to convicted criminal, one principle stands out above all others: leverage is not a tool for building lasting wealth. Leverage is a mechanism that amplifies both gains and losses. When used responsibly with proper risk management, it can accelerate returns. When used recklessly, it guarantees eventual collapse.

Su Zhu’s personal story is a study in how quickly perception can diverge from reality. He looked wealthy because he controlled large amounts of capital. That capital, however, was borrowed. His empire resembled an elaborate pyramid scheme in structure if not in intent—each level depended on continued growth to sustain itself. When growth stopped, the entire edifice crumbled.

The broader lesson for cryptocurrency markets is that not all volatility is organic and not all losses are temporary. A market dominated by leveraged trading and highly concentrated positions can experience sudden, violent reversals. Su Zhu’s failure was not a personal tragedy—it was an industry wake-up call that excessive leverage and inadequate risk management can destroy even the most promising funds.

For investors and traders, the Su Zhu story remains a reminder that the flashiest success stories often hide the deepest risks. Real wealth is not measured by the assets you control but by the assets you can retain during a crisis. And in the cryptocurrency market, where fortunes can evaporate overnight, that distinction has never been more important.