DeFiance, Avalanche, dYdX Distance Themselves From Three Arrows Capital Drama

The firms said operations will continue as usual as the crypto community assesses the fallout from speculation the crypto hedge fund failed to meet margin calls.

AccessTimeIconJun 17, 2022 at 11:47 a.m. UTC
Updated May 9, 2023 at 3:48 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Crypto fund DeFiance Capital, layer 1 blockchain project Avalanche and Ethereum-based trading tool dYdX addressed community concerns Friday as investors assessed possible damage related to speculation that prominent crypto fund Three Arrows Capital (3AC) faces financial difficulties.

  • The three moved to distance themselves from 3AC, which may be facing possible insolvency after incurring at least $400 million in liquidations earlier this week amid a tumbling market and troubles at crypto lender Celsius.
  • “[D]YdX is not exposed to 3AC contagion in any way,” developers said in a tweet in early Asian hours.
  • DeFiance Capital founder Arthur Cheong said in a tweet the firm was “not done” and was “actively working to resolve the situation.” Cheong’s tweet came hours after Messari founder Ryan Selkis said 3AC faced liabilities of over $1 billion and that funds like DeFiance “may be done.”
  • “DeFiance always operates independently,” Cheong wrote in a Telegram message to CoinDesk.
  • Avalanche, a 3AC portfolio project, said its treasury funds were not custodied or managed by 3AC. “Due to recent speculation, we’d like to clarify that 3AC has never in any way managed, used, or custodied any Avalanche Foundation treasury funds,” the project tweeted.
  • At its peak, Dubai-based 3AC managed billions of dollars and its founders, Su Zhu and Kyle Davies, were two of the most vocal crypto market participants in the past few years.
  • While 3AC hasn’t commented on the speculation, Zhu said the team is in contact with relevant parties. “We are in the process of communicating with relevant parties and fully committed to working this out,” Zhu tweeted.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.

Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.