Dubai-based cryptocurrency fund Three Arrows Capital (3AC) has been liquidated for $400 million and faces bankruptcy, The Block reported.
The investment firm has been one of the more prestigious players in the cryptocurrency market for the past few years, but it has not been spared the liquidation of cryptocurrency lending companies. Three Arrows is currently working on how to repay lenders and other counterparties, the sources said.
Su Zhu, founder of Three Arrows Capital, tweeted earlier that “we are in communication with relevant parties and are fully committed to resolving this issue,” but did not provide further details.
As of April this year, Three Arrows Capital held at least $10 billion worth of crypto assets and was highly regarded for its heavy exposure to public chain projects such as Ethereum (ETH), Solana (SOL), and Terra (LUNA). The prices of these cryptocurrencies are down 77%, 90% and 99.7%, respectively, since their all-time highs, according to CoinGecko.
There were rumors earlier that Three Arrows Capital was suspected of having operational and repayment problems due to the market slump. First, tens of billions of dollars were evaporated by participating in the investment in LUNA, and then huge amounts of ether were transferred to the exchange one after another.
In addition, Three Arrows Capital allegedly used leverage to buy Bitcoin, but as Bitcoin continued to fall, it triggered a margin call, so it had to sell a large amount of stETH to repay its debt. Yesterday, it exchanged 17,780 stETH for 16,625 ETH, Then all of them will be converted into nearly 20 million DAI.
Meanwhile, on-chain data suggests that Three Arrows Capital is selling its existing cryptocurrency positions to lower collateral requirements for certain positions. Blockchain data shows that one of Three Arrows’ wallets has a total debt of $183 million.
PeckShield’s monitoring shows that the address presumably related to Three Arrows Capital was liquidated again with 2,681 ETH at around 5:00 noon, and the above-mentioned address was previously liquidated 14,538 ETH.
People familiar with the matter pointed out that Three Arrows Capital has lending positions on multiple cryptocurrency lending platforms such as BlockFi, Genesis and Celsius. If the market continues to fall, it may trigger a large-scale serial liquidation.