Three Arrows Faces Possible Insolvency After Unforeseen Liquidations: Report

The investment firm has been one of the most-vocal crypto market participants in the past few years.

AccessTimeIconJun 15, 2022 at 8:22 a.m. UTC
Updated Jun 15, 2022 at 1:28 p.m. UTC

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

Dubai-based crypto fund Three Arrows Capital is facing possible insolvency after incurring at least $400 million in liquidations, The Block reported Wednesday.

Three Arrows, popularly known as 3AC, was liquidated by crypto lending firms and is currently in the process of repaying lenders and other counterparties, according to the report.

The firm’s founders, Su Zhu and Kyle Davies, were two of the most vocal participants in the crypto markets in the past few years, making bets on non-fungible tokens (NFT), decentralized finance (DeFi) applications, layer 1 blockchain tokens and cryptocurrency companies.

Zhu seemed to address rumors on Twitter this morning. “We are in the process of communicating with relevant parties and fully committed to working this out,” he said, without giving specifics.

Tokens listed as investments on the 3AC site include ether (ETH), solana (SOL), and luna (LUNA). Prices of these are down 77%, 90% and 99.7%, respectively, since lifetime highs, as per CoinGecko data.

3AC’s troubles come amid reports that crypto lender Celsius may be insolvent. The firm managed billions of dollars of user funds and may not possess enough capital to pay out investors.

One of these strategies Celsius used involved the usage of staked ether (stETH), a derivative tied to the ether that lost its peg and could have caused contagion risks, as reported.

Meanwhile, on-chain data suggests 3AC is selling its existing crypto positions to lower collateral requirements for certain positions. One of 3AC’s wallets has a debt totaling $183 million, blockchain data shows.

3AC did not respond to requests for comment at writing time.

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 a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

CoinDesk - Unknown

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

Trending

1
CoinDesk - Unknown
Banks’ Bitcoin Holdings Should Be Capped, Basel Committee Proposes

Holdings of unbacked crypto like bitcoin and algorithmic stablecoins would be limited to 1% of a lender’s capital under the standard-setter's new plans put out for consultation Thursday.

CoinDesk - Unknown
2
CoinDesk - Unknown
Bitcoin Drops to Nearly $19K as Fed Renews Inflation Warnings

Central bank leaders warned Wednesday that inflation is going to last longer than some people anticipated.

CoinDesk - Unknown
3
CoinDesk - Unknown
Harmony Horizon Exploit Linked to North Korea; $10M Bounty Offered in 'Global Manhunt'

Developers said the team was “gathering wallet data” and strategizing plans based on the impact that the incident caused on users.

CoinDesk - Unknown
4
CoinDesk - Unknown
Singapore Central Bank Censures 3AC for Misleading and False Disclosures

Three Arrows Capital also exceeded the threshold of assets it could manage in Singapore, according to the central bank.

CoinDesk - Unknown