Bali H'ai

I will confess to having lost precious little sleep worrying about those who gambled away their fortunes on the cryptocurrency humbug. And precious little time focusing on the details of the companies that aided and abetted the enterprise. 

Sure, I read a bit about Sam Bankman-Fried et al. All those big Stanford-MIT brains...

But I wasn't familiar with Three Arrows Capital, a crypto hedge fund, until I saw a NY Times article a few weeks back on what the fund's two founders have been up to since their company went kaput, "spawning the market meltdown that devastated the industry."

While Sam Bankman-Fried's been cooling his heels under house arrest, The Three Arrows guys have been whiling away the hours "surfing, meditating and traveling the world."

While investigators have been investigating, cofounder Kyle Davies took himself to Bali, where he painted and read Hemingway. (Why am I not surprised.) 

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.” (Source: NY Times)

Barcelona was just one of Davies' travel destinations Using Bali as his basecamp, h swanned around through Thailand, Malaysia, Dubai, Bahrain...

Not a bad life for someone who's only 36 years old. 

Last year, Davies and his partner Su Zhu were crypto "superstars."

...known for their trading acumen and bold predictions about the market. They were fixtures on the crypto podcast circuit whose influence allowed them to borrow hundreds of millions of dollars from leading firms and make big bets on the future of the industry.

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.

Darn the luck for those schmucks, but Davies and Zhu (who's also 36; the two were classmates at Philips Andover and Columbia) are sitting pretty. Meditating. Gaming. Surfing.  

Unlike the other crypto superstars (like Bankman-Fried) who are being held accountable, facing lawsuits and jailtime, others appear to be getting away with things scot-free. While Three Arrows "owes its creditors $3.3 billion," Davies and Zhu seem to have gotten out in time. They both say that they'll never need to work again. (Note that Davies and Zhu are under investigation.)

Although they may not need the money, at 36, both Davies and Zhu still have a bit of chutzpah and juice left.

In April, they unveiled Open Exchange, a marketplace for traders who lost money in last year’s crypto implosions. Customers will be able to buy and sell claims to the bankruptcy estates of defunct crypto firms like FTX and possibly Three Arrows itself.

In pitch documents sent to investors in January, Mr. Davies and Mr. Zhu code-named their new company “GTX,” an alphabetical successor to Mr. Bankman-Fried’s failed exchange.

“I just thought it was very funny,” Mr. Zhu said. 

Emphasis on the chutzpah. (Funny peculiar or funny haha, as we used to say.)

While their investors were absorbing their losses and licking their wounds, Davies and Zhu continued to live large. 

“You eat very fatty pork dishes, and you drink a lot of alcohol, and you go to the beach and you just meditate,” Mr. Davies said as he recounted his travels. “You have these magical experiences.”

So far, one of the 'magical experiences,' hasn't been arrest. Pretty much the only consequence that Davies and Zhu "suffered" was loss of a superyacht (the Much Wow) they were going in on halfsies. But investigators are still investigating.

Let 'em, I guess.

Mr. Davies said he was ready to move on from Three Arrows by the end of last summer. “I really spent so much time meditating in Bali that I’m really just pretty zenned out,” he said.

Davies and Zhu are kicking around some business ideas. A chicken cloud kitchen restaurant in Dubai Filmmaking. Getting into AI. But if nothing pans out, they've made their nuts and can stay retired.

Meanwhile, not surprisingly, Bali has no extradition treaty with the United States.