Su Zhu Recommends Prison for All, in an Attempt to Rebuild a Reputation

Su Zhu flipped the script. After months of people responding to his posts on social media saying the former hedge fund manager should be in jail, he’s now recommending everyone spend a stint in prison. Is it gall or is it just good posting?

"No one wants to go to prison, but I think it's actually a really enjoyable experience overall," Zhu said in a clip of an unnamed and unreleased podcast shared recently on Twitter/X. Apparently his three month incarceration gave him time to decompress, read and realign his spine.

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Zhu is obviously a controversial figure — when 3AC blew up, it reportedly owed creditors $3.3 billion, helping to kickstart a contagion event that erased trillions in value from retail and institutional investors’ portfolios. Davies and Zhu then began traveling the world (primarily to countries with non-U.S. extradition treaties), and refused to collaborate with investigators.

But Zhu is also a master in the art of the post. Whether born or molded into a troll, he has a knack for building an audience in a space where attention is as good as actual currency. When times were good, people looked up to Zhu as a trading guru. And now that times are bad, it seems people are hedging to see whether he can bounce back.

Perhaps it’s clever marketing to remind people he’s at the beginning of his “redemption arc,” discussing the spartan lifestyle of a Singaporean prison where he relearned to value the simple “things that in ancient days would still be considered entertainment.” Or it’s a way of washing away the bad taste in saying he’ll never have to work again after blowing up a $4 billion fund.

It’s always been difficult to gauge whether Zhu is sincere. When he floated the idea of the “supercycle,” predicting one bitcoin could soon be worth $2.5 million, it was never clear if it was because he actually believed Bitcoin would capture the same market value as gold or if he just wanted to foment FOMO for his own personal benefit.

In some sense it doesn’t matter whether he was dumb enough to personally believe crypto would never see another bear market, because the risks he took were with other people’s money. He used his influence and popularity to take out loan after loan after loan from institutions he would eventually help bankrupt, running up a number of embarrassingly bad trades.

Zhu and Davies have denied wrongdoing at nearly every turn, and say it’s not a crime to go bankrupt or to have bets go wrong. Singaporean authorities have accused Zhu and Davies of providing misleading information, evading arrest and have banned them from conducting regulated investment activities for nine years while some of their lenders said they committed fraud and falsified records to get access to more capital, but they haven’t been officially charged with financial violations.

Investing is a game of conviction, and it’s clear enough that Zhu and Davies were and remain true believers in crypto — at least as a vehicle to make money. Their biggest trades, including trading the GBTC premium, betting on staked ETH ahead of the Merge and buying altcoins including LUNA and AVAX, were all bets that crypto was on the precipice of mass adoption amid a moment of rapid digitization and macroeconomic uncertainty during the coronavirus crisis.

See also: The Supercycle: How Crypto Could Shape the Decade Ahead

Arguably, Voyager and BlockFi are at least partially at fault in loaning millions of dollars to 3AC to lose, putting aside the open question of whether they were defrauded. Voyager reportedly lent over half of its loan book to this single company, which speaks as much to its greed as Zhu and Davies’. 3AC is also not the only crypto hedge fund that forgot to hedge.

Sigma Zhu

But as Zhu creeps back into the spotlight — this time espousing a more nuanced philosophy that makes room for the dangers of technology and the importance of finding fulfillment outside of work and money — it’s important to reflect on how he became so central to crypto and the nested dangers of idolizing the fame- and money-hungry.

As a product of Phillips Academy, Columbia University and Credit Suisse, Zhu helped grant legitimacy to crypto by putting his reputation on the line and founding a trading shop. He climbed to the top of an industry that holds little respect among the type of peers he went to private boarding school with, and vice versa, an industry that values hustle and gumption and independent thinking, but above all prizes the ability to make money.

See also: Three Arrows' Su Zhu Faces Questions From Liquidator Teneo

Zhu shows that making money in crypto isn’t just about what you know, but who you know. This is why there are so many copy-trading bots, and why the success of one meme coin over another is often a matter of who’s buying. Zhu was at the center of a complicated web of trend makers and influencers that literally drove the circular economics of recommending winning trades and gaining followers to the breaking point.

It’s telling, for instance, now that his reputation is practically worthless, Zhu is trying to cultivate an identity of someone who only wants to read and finds meaning in simplicity — like a Zen master. Of course, Zhu was not completely abandoned, particularly among self-described “Sigma males” who can excuse allegations of fraud in their reckless disregard for societal norms, and who think it’s probably a good trade getting in close with Zhu now at his lowest.

This is how the cycle starts again: slowly Zhu will rebuild trust and an audience, and with that genuine influence. I hope he has changed, that he is sincere in his recommendation of prison life to get back on track. But I think Zhu is just the type of person who will say whatever suits him, whether that's to manipulate people or markets.