Su Zhu, co-founder of Singapore-based cryptocurrency venture capital firm Three Arrows Capital (3AC), posted a cryptic statement on Twitter in response to rumors that the company is fighting insolvency.
The online talk about 3AC not being able to answer a margin call began after 3AC started moving assets this week to recharge funds on decentralized financing platforms (DeFi) like Aave to avoid possible settlements amid Ether’s tank price ( ETH) this week. There are unconfirmed reports that 3AC faced settlements totaling hundreds of millions from multiple positions.
The DeFi Celsius banking platform has also been frantically strengthening positions to avoid liquidations. Celsius funds account for a significant proportion of the total value blocked on various platforms in the DeFi ecosystem, while 3AC is a major borrower. The collapse of one or both would have important implications for the entire space.
This portfolio (labeled 3AC in Nansen) has been aggressively paying off AAVE debt against its $ 223k ETH / 264mm position to avoid liquidation. With $ 198mm in loans against @ a liquidity threshold of 85%, a move of -11% in ETH to $ 1,042 on liquid pic.twitter.com/2S55Rzl9Xc
– Onchain Wizard (@OnChainWizard) June 15, 2022
In a brief and sweet Twitter post on June 15, Zhu broke his silence after about three days of inaction on social media and suggested that the company is working on its issues:
“We are in the process of communicating with the relevant parties and we are fully committed to resolving it.”
Messari Crypto’s Ryan Selkis highlighted speculation that 3AC began repositioning its balance sheet after being on the “wrong side of two synthetic operations, with size, in GBTC and stETH.”
Wu Blockchain also reported that the company lost about $ 31.37 million by trading on Bitfinex in May.
According to Bitfinex Leaderboard, Three Arrows lost $ 31,370,031.97 in Bitfinex trading in May, ranking second. The account lost $ 37,278,593.9 to Bitfinex this year. In June, the account was not registered. But losses in a single change can only be hedges. https://t.co/Xr8cYjLHII
– Wu Blockchain (@WuBlockchain) June 15, 2022
Rumors escalated after Zhu removed all mention of investments in ETH, Avalanche (AVAX), Earth (LUNA), Solana (SOL), Near Protocol (NEAR), Mina (MINA), DeFi and non-fungible tokens (NFT). ) from his Twitter bio, keeping only a mention of Bitcoin (BTC). Others have questioned the deletion of his Instagram on Su and have asked why both he and co-founder Kyle Davies were inactive on Twitter for three days.
3AC in trouble? whirling rumors
– Kyle and Zhu haven’t tweeted or liked anything for days – Zhu took out all the coins and tagged # from his biography – Zhu deleted his instagram – an hour ago they released 30,000 stETH and reduced all AAVE positions
– moon (@MoonOverlord) June 14, 2022
A related issue is 3AC’s previous exposure to the Earth ecosystem through the Luna Classic (LUNC), which experienced a multimillion-dollar market crash in late May. The platform exchanged approximately $ 500 million in Bitcoin with the Luna Foundation Guard for the amount equivalent to LUNA a few weeks before Earth imploded.
Related: Binance.US faces class action lawsuit over sale of LUNA and UST
Other prominent figures in the space, such as former head of crypto Cathie Wood’s Ark Invest Chris Burniske, also pointed to rumors that 3AC would be the next company to collapse after Earth and Celsius. Alameda Research was also referenced via a meme.
Well, 1 of these 3 is falling, and 1 I doubt it will fall, but the other is something to look at https://t.co/OgBqd7GqHa
– Chris Burniske (@cburniske) June 14, 2022