Crypto Hedge Fund ‘Three Arrows Capital’ Faces Insolvency Amid Forced Liquidations

June 17, 2022, 9:45 AM AEST - 2 weeks ago

The future of Singapore-based crypto venture capital firm Three Arrows Capital (3AC) has been blunted by rumours it faces insolvency after being liquidated on several fronts by its lenders to the tune of around US$400 million.

After a three-day social media silence, co-founder Su Zhu has addressed the rumours with the following, perhaps intentionally vague statement on Twitter:

3AC Sweats on a Repayment Plan

Sources say 3AC – which includes troubled financial services company BlockFi among its venture bets – is working on a way to repay lenders post-liquidation, the latest disaster for an investment firm that has backed the likes of Avalanche, Polkadot and Ether, down 57 percent, 38.8 percent and 47 percent respectively in the past 30 days.

3AC itself sustained significant losses during the collapse of the Terra ecosystem last month after investing heavily in its native token, LUNA. Insolvency rumours escalated when Zhu removed 3AC’s investment profile from his Twitter bio, retaining only a mention of Bitcoin.

Luke Davies (left) and Su Zhu, co-founders of Three Arrows Capital. Source: bloomberg.com

Then both he and Three Arrows Capital co-founder Kyle Davies went conspicuously quiet:

Celsius Stares Down its own Potential Insolvency

Meanwhile, DeFi banking platform Celsius has been shoring up positions to avoid liquidations and this week was positioned for a buyout by crypto services business Nexo after pausing withdrawals in an attempt to stave off insolvency.

Celsius funds account for a significant proportion of the total value locked in various platforms in the DeFi ecosystem, while 3AC is a major borrower. The collapse of either or both would have significant implications for the entire space.

 

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