Bitcoin.com News covered the three-day anniversary of the collapsed crypto hedge fund Three Arrows Capital (3AC). The report came after reports that 3AC was experiencing financial hardships and possibly insolvency. Now the crypto firm Finblox is feeling the effects of 3AC’s troubles, and a few digital currency companies have liquidated the hedge fund’s leveraged positions.
Continue reading Speculation Regarding Financial Hardships Tie to Three Arrows Capital
There’s a lot of rumors and speculation surrounding the crypto hedge fund Three Arrows Capital (3AC), and it seems to be affecting other crypto companies as well. Arguably, 3AC’s problems started with its investment into the Terra blockchain, as it purchased $559 million worth of locked LUNA (now luna classic), which is now worth just under $700. A Twitter account, The Defi Edge (@thedefiedge) explainedA Twitter discussion revealed that 3AC tried to use more leverage to recover its Terra investments losses after the Terra collapse.
Despite this, the markets were shaken by the implosion of Terra LUNA (UST) and Terra LUNA, which caused a large number of liquidations in the crypto market. Degentrading, another account (@hodlkryptonite) said3AC borrowed money from almost every major lender, and this week the company was forced to liquidate. Furthermore, there’s been speculation that 3AC was dumping a great deal of Lido’s wrapped ether product called stETH, which was putting a burden on the stETH peg. Finblox, a 3AC-backed company was founded. detailedThe platform increased withdrawal limits and had to stop all rewards, up to 90% of the APY.
Interestingly, 3AC purchased Protocol X from The Defiedge and wished it to remain anonymous after he finished his twitter thread. told The Defi Edge that 3AC was holding the project’s treasury. “3AC invests in different seed rounds of companies. The protocol typically raises money in USDC/USDT. The problem is that the treasury sits around and does little. So a common deal 3AC did with their protocols is ‘manage’ their treasury,” The Defi Edge wrote. The Twitter account added:
3AC’s Treasury Management. 3AC offered a 8% APR Guarantee on their Treasury. The protocols were to store funds from 3AC and other parts of their Treasury. The protocols felt safe because well…it’s 3AC. Protocol X mentioned that ghosting is real. They’ve talked to two other protocols who also mentioned that they’re being ghosted too by them. 3AC now holds part of their treasury, and they have no idea what’s the state of their cash.
Bitmex and Deribit Liquidate 3AC Positions, Co-Founder Kyle Davies Says the Hedge Fund Is ‘Finding an Equitable Solution for All Constituents’
Additionally, a report published by The Block notes that Bitmex liquidated 3AC’s positions but did not disclose how much was liquidated. “This was collateralised debt and did not involve any client funds,” a Bitmex spokesperson told The Block. “We are not going to be like other brands and wax poetic about our limited exposure and strong capital position — instead, we will demonstrate it by providing our users a reliable and liquid trading venue every day, no matter the situation.” On Twitter, the crypto derivatives exchange Deribit also disclosed information about 3AC’s business dealings.
“We can confirm that Three Arrows Capital is a shareholder of our parent company since February 2020,” Deribit saidThis Thursday. “Due to market developments, Deribit has a small number of accounts that have a net debt to us that we consider as potentially distressed. We will continue to be financially sound and our operations won’t be affected even if this debt is not repaid. All customer funds remain safe. The full insurance fund will continue to exist as it is. Any potential losses will be covered by Deribit,” the exchange added.
It same report published by The Block notes that the editorial’s author contacted both FTX and Bitfinex about 3AC dealings as well. FTX told The Block author Yogita Khatri that they do not comment on their customers, and Bitfinex explained that it “had closed its positions at a loss without having to be liquidated,” Khatri’s report details. According to the Bitfinex statement, 3AC has removed all of its funds from the company’s exchange. Since the rumors and speculation started to swirl around 3AC’s business dealings, so far, the public has only heard from the company’s co-founder Su Zhu once on Twitter.
The cryptic tweet doesn’t really get into any specifics, but says: “We are in the process of communicating with relevant parties and fully committed to working this out.” 3AC’s co-founder Kyle Davies has not tweeted since June 9. Davies, however, did speak with the Wall Street Journal (WSJ) and said: “We have always been believers in crypto and we still are. We are committed to working things out and finding an equitable solution for all our constituents.” The WSJ report noted that 3AC was looking for help from “legal and financial advisers” in order to quell the company’s financial burdens.
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