Hedge fund Three Arrows Capital faces cryptocurrency bankruptcy
- As the cryptocurrency market continues to fall, more and more investors are faced with liquidating their assets.
- Zhu Su, the co-founder of Singapore-based venture capital firm Three Arrows Capital (3AC), refutes rumors that the company is struggling with insolvency.
Bitcoin (BTC) fell to $20,100 today, and all cryptocurrency continues to bleed. Retail investors are not the only ones affected by this decline. Giant cryptocurrency investment firms are also on the brink of bankruptcy. One of them is Zhu Su’s company, Three Arrows Capital. Here are the details:
The future of cryptocurrency hedge fund Three Arrows Capital looks bleak in the face of the company potential bankruptcy after liquidation by creditors. The fund company was reportedly liquidated by some major creditors. The liquidation took place in the last 30 days and the company, which backs projects such as Avalanche, Polkadot and Ethereum, which lost 57%, 38.8% and 47% respectively, lost money as critical thresholds have been exceeded.
Three Arrows Capital also invested in the native token Terra LUNA, where they lost a significant amount of money. The company, which by some estimates managed nearly $10 billion and was at the top of the market, is run by former classmates Su Zhu and Kyle Davis.
We are communicating with the affected parties and are fully committed to resolving this issue.
— Zhu Su 🔺 (@zhusu) June 15, 2022
Zhu, a cryptocurrency bull, took to Twitter a few weeks ago to admit that bullish expectations of a “super cycle” in the cryptocurrency market are “unfortunately wrong.”
“Unfortunately, the super cycle price thesis was wrong, but cryptocurrency will continue to evolve and change the world every day,” he said in late May.
The idea of a super cycle came from Zhu, who suggested that the cryptocurrency market would gradually rise during this market cycle, avoiding a perpetual bear market.
Rumors that 3AC cannot avoid a margin call began after 3AC began moving assets this week to replenish funds on decentralized finance (DeFi) platforms such as Aave to avoid a possible liquidation in the middle of the drop in the price of Ether (ETH) this week. According to unconfirmed reports, 3AC faces the liquidation of hundreds of millions in several positions.
Another address associated with Three Arrows Capital redeemed ETH to Aave: Lengding Pool after trading 38,900stETH for 36,718.64ETH. There are currently 19,612.37 stETH left at this address. https://t.co/GOPHnLptEq
– Wu Blockchain (@WuBlockchain) June 14, 2022
DeFi banking platform Celsius is also feverishly strengthening its positions to avoid liquidation. Celsius funds make up a significant portion of the total value locked up in the various platforms in the DeFi ecosystem, while 3AC is a major borrower. The collapse of one or both would have significant consequences for the whole of space.
Su Zhu’s cryptic statement as rumors swirl about 3AC liquidations
Zhu Su, co-founder and CEO of Three Arrows Capital responded to rumors about the crypto investment firm’s operations and creditworthiness.
The tweet came amid widespread speculation on social media among cryptocurrency marketers that recent cryptocurrency market conditions have negatively impacted Three Arrows to the point that it is now faced with bankruptcy.
This wallet (tagged 3AC on Nansen) aggressively repaid AAVE debt against its 223,000 ETH / $264 million position to avoid liquidation. With $198M borrowed against it, @ 85% liquidity threshold, -11% move in ETH to $1,042 cashhttps://t.co/y7yJJ0NlMc pic.twitter.com/2S55Rzl9Xc
– Onchain Wizard (@OnChainWizard) June 15, 2022
The fund suffered significant losses during the collapse of the Terra ecosystem last month after a large investment in native Terra token LUNA and is now facing further market turmoil after cryptocurrency lender Celsius suspended withdrawals on Monday.
Faced with the need to liquidate hundreds of millions of dollars, the future of Three Arrows Capital looks uncertain. They have $183 million in debt with $235 million secured in AAVE V2 alone. If Ethereum drops to $1,014, the margin position will be liquidated. As of this writing, Ethereum is finding buyers at $1,030.
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